Ebun Francis|
The International Monetary Fund (IMF) senior resident representative for Nigeria, Amine Mati has said that Nigeria uses more than 50 percent of her revenue to service the country’s debt
Mati who stated this during a presentation by the International Monetary Fund (IMF) on the economic outlook for sub-Saharan Africa, said that although Nigeria’s debt to gross domestic product (GDP) was quite low, the country uses more than 50 percent of revenue for interest payments.
The IMF senior representative has, therefore, advocated for an increase in revenue sources in order to bridge the gap and ensure that revenue to GDP is sufficient to pay up and service debt profitably.
According to the half-year activity report released by the Central Bank of Nigeria (CBN), cost of debt servicing increased by 37.04 percent to N941.99 billion in June 2018, compared to N687.37 billion recorded in June 2017.
In her contribution, Patience Oniha, director-general, Debt Management Office (DMO), said volatility in the international market contributed to the country’s rising debt profile.
Using the US greenback as an example, the DMO DG said a rise in US dollar interest rates had discouraged some foreign investors from putting their money in Nigeria.
According to her, investors were “exiting and selling out” because of the rise.
She also explained that the federal government increased its level of external borrowing in 2017 and reduced domestic borrowing because it is cheaper to do so.
According to Oniha, Nigeria is borrowing externally at fixed interest rates so as not to affect the debt portfolio already established.