The World Bank has disagreed with the Minister of Finance, Mrs. Kemi Adeosun, on the need for the Federal Government to borrow more in order to develop the nation’s infrastructure and stimulate the economy.

The World Bank spoke through its Senior Economist, Gloria Joseph-Raji, on Monday in Abuja, saying that the cost of borrowing or paying interest on Nigeria’s debt was not sustainable as revenues to make such payment had dried up.

She spoke with our correspondent on the sidelines of the lunch of Africa Pulse, a biannual report on Africa.

Adeosun said on Sunday at a press briefing rounding off the World Bank/International Monetary Fund annual meeting in Washington DC, United States that Nigerians would have to tolerate more borrowings in the short term for the government to deliver critical infrastructure.

But Joseph-Raji said that dwindling revenues had raised a concern both at the Federal Government and the World Bank on sustainability of Nigeria’s borrowings as debt-to-revenue ratio had increased by 25 per cent within a period of one year.

She said in 2015, the country’s debt to revenue ratio stood at 35 per cent but rose to 60 per cent by 2016, reflecting a reduction in government revenues and rising debt profile, thereby raising a question about the debt sustainability.

Joseph-Raji said, “Nigeria has a decent debt-to-GDP ratio, currently about 19 per cent. It is the debt to revenue ratio that is of concern and that rate is a sustainable issue. That is of concern to us and that is also of concern to the government.

“The government is aware that the debt is looking more unsustainable from the point of debt service to revenue ratio. The estimate we had for last year at the federal level was about 60 per cent. That is coming from about 35 per cent in 2015.

“That reflects the substantially lower revenues that Nigeria recorded last year. Even among the state governments; we know that a lot of state governments are servicing a lot of debts from their federation account allocation. So, there is really going to be a sustainable issue emerging.”

The World Bank expert said she was concerned about the sustainability of the country’s debt, especially the huge domestic borrowing with high interest rate, which prompted the Debt Management Office to come up with a strategy to rebalance the country’s debt portfolio.

She said, “The DMO released the Debt Management Strategy 2016 to 2019 last year. The strategy was to rebalance the debt portfolio from more of domestic now to more of foreign. That is because of the debt servicing cost.

“Before now we had a debt portfolio of about 80 per cent domestic to 20 per cent external. We know that the debt servicing cost of domestic debt is really high. Treasury bill is an average of 18 per cent; the FGN bonds, from 16 per cent. The government is trying to rebalance its portfolio with foreign debt, which has much lower interest rate than domestic debt. That is why this year you have seen them go for Eurobonds, with a total of $1.5bn in the first quarter of the year. They also did Diaspora bond of $300m. If you look at the yield on those bonds, they are much less than 10 per cent.

“The government is aware that there is a sustainable issue and that is what they are trying to correct by taking more foreign debt.”

Joseph-Raji said in the light of expenditure exceeding revenue, government should borrow, but it should borrow in a manner that was sustainable.

Also speaking on the issue in an interview with our correspondent, the Head of Abuja office of Social Action, a Non-Governmental Organisation active in debt relief advocacy, Mrs. Vivian Bellonwu-Okafor, said the government needed to think about better ways of managing the economy.

She said borrowing $3bn from abroad to refinance local debts was replacing one evil with another evil.

Bellonwu-Okafor said foreign borrowing would invariably lead to annual debt servicing in hard currency to foreign lenders.

She said, “The $3bn debt refinancing arrangement, as proposed by the Federal Government, does not solve the country’s rising debt problem; it merely trades one evil for another.

“Borrowing longer-term foreign loans to pay off maturing short-term domestic debt, instead of taking actual steps to gradually reduce and exit debt overhang, is a demonstration of poor economic management.

“Several developing countries have adopted far-reaching domestic strategies to mitigate the effects of international market shocks and global financial crisis. While countries like Malaysia are increasing internal investments to develop their economies and make them as independent and vibrant as possible, rather than shrink deeper into global financial waters, Nigeria seems to be doing quite the opposite; preparing frameworks and opportunities for more foreign exchange and capital flight from the country in annual debt servicing.”

In another telephone interview with our correspondent, a financial expert and associate professor, and Head of the Department of Banking and Finance, Nasarawa State University, Dr. Uche Uwalaka, said there was no doubt that Nigeria’s debt to revenue ratio was high.

According to him, the use of the index is a better way to measure a country’s capacity to pay debt and interest.

Although he said that the country hardly had any better option than to borrow, he insisted that debts should be tied to projects that were self-liquidating.

He said, “There is no doubt that the country’s debt burden is high going by the debt to revenue ratio. There are other measures of the debt burden such as the debt-to-GDP ratio, which is currently around 18 to 19 per cent.

“External debts are cheaper to service especially when they come from multilateral sources. The attention of government has shifted to foreign debt. I am in support of government’s plan to borrow $3bn to refinance some local debts. What is important is that the National Assembly and other agencies should focus on is the monitoring of what we do with foreign loans. This is because foreign loans also have their own risks such as shock in exchange rates.”

Uwalaka said other options to borrowing such as sale of national assets, increase in taxes and printing of money were not viable in the present circumstances of the country.

I don't see this country overcoming it's problems when you have a man who after retiring deemed it fit to rear 150 cows while you have the likes of Trump managing billions of Dallas.


We agree that he's daft but then he surrounded himself with use less things that don't know anything at all.


He will not die a peaceful death for the pains he has caused this nation and the ones he's causing us and also the ones he's going to cause till 2019 when we boot that animal out.

Madam Adeosun should come up with something unique and sustainable as borrowing and selling of national assets is not best option. We the Progressive Nigerians are solidly behind this administration, we understand your plight.

this is the reason some people complained about PMB telling the WB to favour the North East.


most funds received from WB have been given to an area that cannot payback. how can we allocate billions of dollars to an area that is dependent on subsistence agriculture?


funds for rehabilitation in an area that cannot repay loans should be donations without strings attached.
now the south is stuck with paying back the loan which invariably reduces funds for development.


yet, some people think PMB was right... how sad.

.

Akpata atufuo. E ji ya abaa ogaranya

Despite glaring inadequacies and inefficiencies by PMB there are many people waiting at the corner ready to retain this man come 2019.....we are the problem

GCan anyone point to Mme one significant worldbank project which leads to self reliance.
All I see is funding for projects that leads to the production of paper .
Nigeria needs power plants, transmission lines ,modern water and sewage system, rail lines etc .
I have never seen anything remotely close to that funded by the world bank.
Nigeria need to go big on the power sector and steel sector .

cetzak:
The World Bank has disagreed with the Minister of Finance, Mrs. Kemi Adeosun, on the need for the Federal Government to borrow more in order to develop the nation’s infrastructure and stimulate the economy.

The World Bank spoke through its Senior Economist, Gloria Joseph-Raji, on Monday in Abuja, saying that the cost of borrowing or paying interest on Nigeria’s debt was not sustainable as revenues to make such payment had dried up.

She spoke with our correspondent on the sidelines of the lunch of Africa Pulse, a biannual report on Africa.

Adeosun said on Sunday at a press briefing rounding off the World Bank/International Monetary Fund annual meeting in Washington DC, United States that Nigerians would have to tolerate more borrowings in the short term for the government to deliver critical infrastructure.

But Joseph-Raji said that dwindling revenues had raised a concern both at the Federal Government and the World Bank on sustainability of Nigeria’s borrowings as debt-to-revenue ratio had increased by 25 per cent within a period of one year.

She said in 2015, the country’s debt to revenue ratio stood at 35 per cent but rose to 60 per cent by 2016, reflecting a reduction in government revenues and rising debt profile, thereby raising a question about the debt sustainability.

Joseph-Raji said, “Nigeria has a decent debt-to-GDP ratio, currently about 19 per cent. It is the debt to revenue ratio that is of concern and that rate is a sustainable issue. That is of concern to us and that is also of concern to the government.

“The government is aware that the debt is looking more unsustainable from the point of debt service to revenue ratio. The estimate we had for last year at the federal level was about 60 per cent. That is coming from about 35 per cent in 2015.

“That reflects the substantially lower revenues that Nigeria recorded last year. Even among the state governments; we know that a lot of state governments are servicing a lot of debts from their federation account allocation. So, there is really going to be a sustainable issue emerging.”

The World Bank expert said she was concerned about the sustainability of the country’s debt, especially the huge domestic borrowing with high interest rate, which prompted the Debt Management Office to come up with a strategy to rebalance the country’s debt portfolio.

She said, “The DMO released the Debt Management Strategy 2016 to 2019 last year. The strategy was to rebalance the debt portfolio from more of domestic now to more of foreign. That is because of the debt servicing cost.

“Before now we had a debt portfolio of about 80 per cent domestic to 20 per cent external. We know that the debt servicing cost of domestic debt is really high. Treasury bill is an average of 18 per cent; the FGN bonds, from 16 per cent. The government is trying to rebalance its portfolio with foreign debt, which has much lower interest rate than domestic debt. That is why this year you have seen them go for Eurobonds, with a total of $1.5bn in the first quarter of the year. They also did Diaspora bond of $300m. If you look at the yield on those bonds, they are much less than 10 per cent.

“The government is aware that there is a sustainable issue and that is what they are trying to correct by taking more foreign debt.”

Joseph-Raji said in the light of expenditure exceeding revenue, government should borrow, but it should borrow in a manner that was sustainable.

Also speaking on the issue in an interview with our correspondent, the Head of Abuja office of Social Action, a Non-Governmental Organisation active in debt relief advocacy, Mrs. Vivian Bellonwu-Okafor, said the government needed to think about better ways of managing the economy.

She said borrowing $3bn from abroad to refinance local debts was replacing one evil with another evil.

Bellonwu-Okafor said foreign borrowing would invariably lead to annual debt servicing in hard currency to foreign lenders.

She said, “The $3bn debt refinancing arrangement, as proposed by the Federal Government, does not solve the country’s rising debt problem; it merely trades one evil for another.

“Borrowing longer-term foreign loans to pay off maturing short-term domestic debt, instead of taking actual steps to gradually reduce and exit debt overhang, is a demonstration of poor economic management.

“Several developing countries have adopted far-reaching domestic strategies to mitigate the effects of international market shocks and global financial crisis. While countries like Malaysia are increasing internal investments to develop their economies and make them as independent and vibrant as possible, rather than shrink deeper into global financial waters, Nigeria seems to be doing quite the opposite; preparing frameworks and opportunities for more foreign exchange and capital flight from the country in annual debt servicing.”

In another telephone interview with our correspondent, a financial expert and associate professor, and Head of the Department of Banking and Finance, Nasarawa State University, Dr. Uche Uwalaka, said there was no doubt that Nigeria’s debt to revenue ratio was high.

According to him, the use of the index is a better way to measure a country’s capacity to pay debt and interest.

Although he said that the country hardly had any better option than to borrow, he insisted that debts should be tied to projects that were self-liquidating.

He said, “There is no doubt that the country’s debt burden is high going by the debt to revenue ratio. There are other measures of the debt burden such as the debt-to-GDP ratio, which is currently around 18 to 19 per cent.

“External debts are cheaper to service especially when they come from multilateral sources. The attention of government has shifted to foreign debt. I am in support of government’s plan to borrow $3bn to refinance some local debts. What is important is that the National Assembly and other agencies should focus on is the monitoring of what we do with foreign loans. This is because foreign loans also have their own risks such as shock in exchange rates.”

Uwalaka said other options to borrowing such as sale of national assets, increase in taxes and printing of money were not viable in the present circumstances of the country.

let me assist you, op.

Http://punchng.com/world-bank-disagrees-with-
adeosun-on-borrowing/
what do you expect from a haftbake commissioner who knows nothing about economy . There are so many knowledgeable personnel that can manage our economy without apathetic but he chooses to layon with this creepiest Pandora's box.

Borrowed to be looted. Will Nigeria ever get there in this generation?
10 years on Nairaland today. Ṣeun, come celebrate am for me

Buhari is completely irredeemable , I have studied this man's history from his days as a young officer and I can conveniently tell y'all for free that this man is the major problem that derailed Nigeria and not the many other mundane things we had been made to believe ...I swear If the Nigerian Army had don the right thing by not employing the unqualified Buhari in the first place Nigeria would have been comparable to UAE today..We got it wrong the day the Army employed him

Okonjo Iweala may you live long

A finance minister that never advised Nigeria to borrow

Adeosun came to speak queens English

madam english

Nigerians,their children and grand children would would pay back every single penny borrowed by this administration with all the accrued interest. the funniest aspect is that all that money would be paid with a devalued money.thus the money borrowed by buhari in 2015 at the rate of #180-#200 per dollar is been paid today at the rate of #360-#400 per dollar thus Nigerians would have to work twice the effort to pay back. the funniest aspect is that as the rest of the world embraces renewable and clean energy with most nations banning vehicles running on petroleum products in the next 7-9 years time, the demand and price of petroleum would fall further thereby further reducing our revenue and increasing our debt to revenue ratio.

NigerDeltan:
Okonjo Iweala may you live long

A finance minister that never advised Nigeria to borrow

Adeosun came to speak queens English

When oil prices just started dropping and Nigerias revenue started dipping, Okonjo Iweala did not just advise Nigeria to borrow, but she actually borrowed about $2-3 billion from foreign lenders to pay off FG workers' salaries in February 2015, and that was at a time when oil still sold for up to $75. She also warned Nigerians of hard times ahead if the oil prices didnt pick up. I'd assume you know how the oil prices fared afterwards? So before you make this sort of ignorant comment next time accusing her successor finance minister of borrowing, it would be helpful if you got yourself informed first.

Meanwhile between 2010 when GEJ/NOI stepped in, and 2015 when they left, Nigeria's debt grew very significantly; and that was a rising debt profile at a time when the nation's revenue was still reasonable. You hail a person who borrowed significantly at a time of plenty as a genius, but the person who talks of borrowing to survive at a time of lack is a dunce to you?...

This APC's otondo finance minister thinks the world is still in the Buhari's premedivial era.Borrowing that is accumulating Nigerian debt with no visible capital infrastructure.APC is just mortgaging this country with their corruption.

obailala:
When oil prices just started dropping and Nigerias revenue started dipping, Okonjo Iweala did not just advise Nigeria to borrow, but she actually borrowed about $2-3 billion from foreign lenders to pay off FG workers' salaries in February 2015, and that was at a time when oil still sold for up to $75. She also warned Nigerians of hard times ahead if the oil prices didnt pick up. I'd assume you know how the oil prices fared afterwards? So before you make this sort of comment next time, it would be helpful if you got yourself informed.

.It's not by speaking long English.And what have the APC government done with the recovered/relooted funds,IGRs,savings from the TSA and all the phantom propaganda monies its have claimed to have recovered Why borrowing when Nigeria have these monies @ her disposal? Tell us they have all been relooted or it remains propaganda as usual.

Afonjas want her there as their own Okonjo Iweala. Always dragging feet with Igbos as if Igbos are their mate. A mere Ibadan accountant turned Minister of Finance in the name of tribalism and cronyism. She has destroyed our economy.

Paperwhite:

It's not by speaking long English.

Any person with half a dose of common sense can rationalise what I said below. This obviously isnt an argument on grammar.


Read again and point out the exact part of the argument you disagree with.

obailala:
When oil prices just started dropping and Nigerias revenue started dipping, Okonjo Iweala did not just advise Nigeria to borrow, but she actually borrowed about $2-3 billion from foreign lenders to pay off FG workers' salaries in February 2015, and that was at a time when oil still sold for up to $75. She also warned Nigerians of hard times ahead if the oil prices didnt pick up. I'd assume you know how the oil prices fared afterwards? So before you make this sort of ignorant comment next time accusing her successor finance minister of borrowing, it would be helpful if you got yourself informed first.

Meanwhile between 2010 when GEJ/NOI stepped in, and 2015 when they left, Nigeria's debt grew very significantly; and that was a rising debt profile at a time when the nation's revenue was still reasonable. You hail a person who borrowed significantly at a time of plenty as a genius, but the person who talks of borrowing to survive at a time of lack is a dunce to you?...

obailala:

Any person with half a dose of common sense can rationalise what I said below. This obviously isnt an argument on grammar.


Read again and point out the exact part of the argument you disagree with.

They should use recovered loots first before they start saying any shiit on borrowing. APC is a failed party headed by miscreants and supported by d a f t children

I am currently building a macroeconomic database and model for the Nigerian economy as part of a project, and I can clearly see that the debt levels have escalated and risks becoming unsustainable. My worry is that I can't put my hand on what this government has done with the borrowed funds in the last two years.

Paperwhite:
.It's not by speaking long English.And what have the APC government done with the recovered/relooted funds,IGRs,savings from the TSA and all the phantom propaganda monies its have claimed to have recovered Why borrowing when Nigeria have these monies @ her disposal? Tell us they have all been relooted or it remains propaganda as usual.

That's another discussion altogether. The comment I responded to ignorantly claimed that Nigeria didnt borrow under Okonjo iweala, I simply clarified that.

To answer your own issue raised on recovered funds, TSA and IGR, I would start from IGR.

Nigeria has always received IGR which has been used to finance budgets. Nigeria's recurrent expenditure runs over 4.5 trillion yearly, the current IGR which comes mainly from tax and duties hardly even covers that recurrent bill. So except you are claiming a new source of IGR has come up which has recently doubled what Nigeria got in the past, then your mention of IGR is pointless in this argument.

TSA: That the country has over 6 trillion in TSA, that doesnt mean it is 6 trillion of disposable savings that could be dipped into and spent; those monies already belong to agencies, it isnt disposable income.

Recovered loot: Every one keeps ignorantly shouting recovered loot as if it's some $50 billion left idle in a vault somewhere. The wise question to ask is, when you put it all together, how much has been recovered in total?... Fairy tale activists/critics expect the recovered 1billion, 3billion, 200million etc to turn Nigeria into Dubai overnight. Meanwhile most of the so called recovered funds are still tied up in litigation (e.g. Mama P recently got her loot back through the courts); but of course, fairy tale activists/critics expected these monies to be spent too to turn Nigeria into Dubai overnight. Meanwhile just so you know, up to N250bn from recovered funds was to finance the 2017 budget, something similar also happened in 2016. So quit asking this "where are looted funds?" question and just hit google for your answers.

https://www.premiumtimesng.com/news/top-news/218458-n250-billion-recovered-looted-funds-used-finance-2017-budget.html

OZAOEKPE:

They should use recovered loots first before they start saying any shiit on borrowing. APC is a failed party headed by miscreants and supported by d a f t children

Oh yes, PDP I suppose is a working party headed by saints and supported by genuis children. No wonder PDP spent over $25billion on power alone but as at the week of May 29th 2015 when PDP was handing over, Nigeria's power generation was less than 1500mw. You are obviously one of the smart children licking the stinking asses of pdp rogues right?

Every one keeps ignorantly shouting recovered loot as if it's some $50 billion left idle in a vault somewhere. The wise question to ask is, when you put it all together, how much has been recovered in total?... Fairy tale activists/critics expect the recovered 1billion, 3billion, 200million etc to turn Nigeria into Dubai overnight. Meanwhile most of the so called recovered funds are still tied up in litigation (e.g. Mama P recently got her loot back through the courts); but of course, fairy tale activists/critics expected these monies to be spent too to turn Nigeria into Dubai overnight. Meanwhile just so you know, up to N250bn from recovered funds was to finance the 2017 budget, something similar also happened in 2016. So quit asking this "where are looted funds?" question and just hit google for your answers.

https://www.premiumtimesng.com/news/top-news/218458-n250-billion-recovered-looted-funds-used-finance-2017-budget.html

If I talk now them say my mouth smell.

madridguy:
Madam Adeosun should come up with something unique and sustainable as borrowing and selling of national assets is not best option. We the Progressive Nigerians are solidly behind this administration, we understand your plight.

You sef don tire with the cluelessness of your people baa? Sorry,pele,ndo,ka yi hankuri.

obailala:
Oh yes, PDP I suppose is a working party headed by saints and supported by genuis children. No wonder PDP spent over $25billion on power alone but as at the week of May 29th 2015 when PDP was handing over, Nigeria's power generation was less than 1500mw. You are obviously one of the smart children licking the stinking asses of pdp rogues right?

Every one keeps ignorantly shouting recovered loot as if it's some $50 billion left idle in a vault somewhere. The wise question to ask is, when you put it all together, how much has been recovered in total?... Fairy tale activists/critics expect the recovered 1billion, 3billion, 200million etc to turn Nigeria into Dubai overnight. Meanwhile most of the so called recovered funds are still tied up in litigation (e.g. Mama P recently got her loot back through the courts); but of course, fairy tale activists/critics expected these monies to be spent too to turn Nigeria into Dubai overnight. Meanwhile just so you know, up to N250bn from recovered funds was to finance the 2017 budget, something similar also happened in 2016. So quit asking this "where are looted funds?" question and just hit google for your answers.

https://www.premiumtimesng.com/news/top-news/218458-n250-billion-recovered-looted-funds-used-finance-2017-budget.html

My fellow Yoruba Muslim are you not tired defending this man?

Tired of what? APC till thy Kingdom come

Paperwhite:
You sef don tire with the cluelessness of your people baa? Sorry,pele,ndo,ka yi hankuri.

NigerDeltan:


My fellow Yoruba Muslim are you not tired defending this man?

Sorry who are you again?... No I'm not tired of blasting people making ignorant comments such as "GEJ did not borrow money!" Spewing ignorance isnt the best way to criticise a govt.