Endless Borrowing – Experts Worry, Okonjo-Iweala, Ahmed Differ On Nigeria’s Debts
The Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Director General of the World Trade Organisation, Dr Ngozi Okonjo-Iweala, on Wednesday, differed on the nation’s debt to Gross Domestic Product ratio. Experts also expressed worry over the nation’s rising debt profile. While Ahmed put the debt to GDP ratio at 29 percent, Okonjo-Iweala said it had risen to 35 percent. Both the minister and the WTO boss spoke at the African Development Bank High Level Knowledge Event with the theme – From Debt Resolution to Growth – The Road Ahead for Africa’ which held virtually on Wednesday. Ahmed also disclosed that Nigeria planned to borrow more money to fund its infrastructure capacity. This is in spite of voices calling on the government to halt borrowing and concentrate on other means of raising funds for infrastructure needs of the country. Ahmed said the government was enforcing fiscal discipline to expand its fiscal space so that it could continue to service its debts and borrow more to build the nation’s infrastructure capacity. Ahmed also said that the total debt profile did not include that of some states, and that the federal government was making moves to correct that.
However, Ngozi Okonjo-Iweala, who also attended the AfDB’s event, differed with Ahmed on the nation’s debt to GDP ratio. The WTO boss who had been Nigeria’s Minister of Finance in the past said the nation’s debt to GDP ratio had risen from 29 percent to 36 percent. Okonjo-Iweala also said that scarce foreign exchange in certain African countries was creating scenerios where the governments were using scarce forex to fund debt repayment rather than on capital investment.” A Professor of economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, described as a cause for worry the amount being spent by the government on debt servicing. President of the AfDB, Akinwunmi Adesina, said that cumulative total debt in Africa was higher than cumulative government revenue. “Millions fell into extreme poverty on the continent. Thirty nine million Africans could fall into poverty by the end of 2021.” He added that as of 2021, 17 out of 38 African countries for which debt sustainability was available were in dire distress.
