IMF Position on Nigeria’s Debt Vulnerabilities: Take Action Before It Is Too Late
The Resource Centre for Human Rights & Civic Education (CHRICED) firmly welcomes the subtle note of caution recently handed down by the International Monetary Fund (IMF) to the authorities over Nigeria’s increasing vulnerabilities as a result of its burgeoning national debt. With the IMF calling on the Federal Government to focus more on revenue mobilization, instead of unsustainable borrowing, it is very clear that even Nigeria’s creditors are getting wary of the prospects of the country getting bogged down by massive and unsustainable debt burden.
Consequently, CHRICED hopes that the Federal Government will take due notice of IMF’s admonition, curb its appetite for uncontrolled borrowing by working to position the Nigerian economy to be on the right footing. That goal would have been achieved where the government no longer depends heavily on loans, and external borrowing to fund key aspects of the national budget. It will be good for Nigeria and its economy if the government can begin to exercise some fiscal discipline by cutting down its huge appetite for loans. This is possible if the government vigorously and sincerely drives the anticorruption fight. However, taking the IMF’s advice on board would mean doing some reflection to determine the exact value of Nigeria’s current debt stock has added to the lives of citizens, and the health of the national economy.
Preliminary findings from ongoing CHRICED analysis of Nigeria’s debt situation shows that current national debt, which is piling up, has not translated to any meaningful gains in the lives of the average Nigerians. Rather, the country debt profile has created a wide disparity between the rich (in government) and the poor. It is apparent that while Nigeria is currently spending a big part of its budget for servicing loans and other credit facilities, the money borrowed has not been felt in critical sectors such as education, health, infrastructure and human capital development. The fundamental question therefore is: if the impact of all the monies borrowed cannot be felt in the critical sectors of national life, where did the monies go? Given the endemic nature of corruption, illicit financial flows in Nigeria’s public finance management, it is apparent that many of the loans have been lost to financial malfeasance. What then is the point of saddling the country with huge loans, which will end up being looted by the greedy political elite that never care if the country bleeds to death?
In the face of these realities therefore, CHRICED calls on the Federal Government to seriously reflect on the point made by the IMF in order not to suffocate the country with more unsustainable debt. With well laid out plans, sincerity of purpose, and with the right people in the proper positions, Nigeria will definitely be able to generate the revenue it needs to fund its development, instead of constantly resorting to the unproductive approach of excessive borrowing. If not jettisoned, this trend would spell doom for the country. As the IMF has indicated, there are many ways and strategies Nigeria can adopt to address its revenue crisis. Plunging the country into more debt, is a bad strategy that has never worked.
Long live the Federal Republic of Nigeria.
Signed:
Comrade Dr. Ibrahim M. Zikirullahi
Executive Director
