Experts fault IMF boss over Nigeria’s debt profile
Economic analysts have faulted the Managing Director of the International Monetary Fund, IMF, Ms. Christine Lagarde, saying that the country’s debt to GDP ratio was in the balance, therefore, can raise funds from the bond market to finance development.
Lagarde had expressed concern over Nigeria's debt profile, advising the Federal Government to be careful with its borrowing plans.
The IMF boss, who visited the country on a four-day working trip, warned the Federal government against taking foreign loans to run the economy, just as she told Nigerians not to expect an immediate improvement of the economy amid consistent fall in the price of crude oil at the international market.
However, the Chief Executive Officer of Financial Derivative Limited, Bismarck Rewane, while welcoming the IMF’s chief visit, said Nigeria’s to borrow more to bridge funding gap.
Rewane said: “Nigeria needs money at this time more than anybody else. The IMF may not likely put its money at this time, but the World Bank and African Development Bank surely will. We are going to tap the whole bond market and its quite clear that we would need N900 billion from the international market. So, we need the endorsements of Washington, Paris and London clubs.”
Also, a development economist, Odlim Enwegbara, described Lagarde’s advice as misleading, explaining that the country as at now, is creditworthy and can borrow as high as $270bn during the next four years without being debt trapped, stressing that the Debt Management Office (DMO) of Nigeria has been effective in the management of the country’s debt portfolio.
According to him, “this is however dependent on if our debt remains project-driven, particularly infrastructure-based loans that by reducing our current infrastructure deficit, reduce the present high cost of doing business and high interest rate causing high arbitrage.
“I was instead expecting her to insist on government justifying borrowing by borrowing purely for investment rather than for consumption.
“Ms Lagarde needed to have applauded the Buhari administration for its bold efforts to drastically increase investment in capital projects which he wouldn’t be able to do without having to borrow.
“Even though a lawyer and not an economist, her experience as someone who as a former French minister finance would have guided her advice in a way to agree that there’s no other way Nigeria should expect to solve huge infrastructure deficit head-on than to engage in massive borrowing, especially at a time when its main source of revenue, oil, is witnessing unprecedented plunge.
“Or isn’t it hypocritical of her to be advising us not to borrow given our debt-to-GDP ratio which at about 12 per cent is by far the lowest among our peers?” He queried.