Analysing Nigeria’s current economic conditions and the burden of debt servicing, the Chairman of the Debt Management Roundtable (DMR), Taiwo Oyedele, has said that the rising figure augurs a debt crisis.
He said this in an interview on NESG Radio, stating that the standard of debt to GDP ratio set by international financial bodies does not accurately portray what is obtainable in Nigeria and the rest of West Africa.
He said that although there are debt waivers, however, these opportunities are constrained and there would not always be an avenue for these organisations to write off debts, especially when most of the debts are not eligible for waivers.
Oyedele said, “The primary source of concern for Nigeria is not the debt to GDP ratio which is still within the international threshold. What the DMR is actually interrogating are whether those international thresholds are indeed appropriate for our West African countries.
“If you take Nigeria for example, our debt to GDP ratio is still under 35%, but our debt service cost to revenue is already 70% for the Federal Government. This is already pointing towards a debt crisis.
“They do not have the capacity to waive our debts and we cannot force them to. Otherwise there will be significant negative consequences for Nigeria. While there is nothing wrong with looking for opportunities for waivers or renegotiation of terms, we need to be mindful that a significant portion of our debts will not be eligible for waivers or forgiveness.”
He added that borrowing by the government becomes a worry for citizens in the face of an inability to repay loans and meet the conditions set out in the agreement.
He said, “Borrowing is indeed necessary for countries, businesses and individuals. But if you get to a point where there are concerns about the terms for those borrowings, your ability to meet those terms, utilisation of the funds you borrow and your ability to repay when they are due, it could become a source of concern for citizens, businesses and the general public.”