IMF Warns Nigeria and Other Low Income Countries on Foreign Borrowing
The International Monetary Fund has warned Nigeria and other low income countries with greater reliance on foreign borrowing may at some point expose their economies to vulnerability, if the funds are not put to good use.
The Financial Counsellor and Director, Monetary and Capital Markets Department of the fund, Mr. Tobias Andrian, gave the warning while briefing journalists on IMF’s Global Financial Stability Report titled, “Is Growth at Risk?” released at the IMF/World Bank Annual Meetings taking place in Washington D.C.
The IMF, however, welcomed the effort by the federal government to reduce the country’s infrastructure gap, particularly in the power sector. He noted that while borrowing has generally been used to fund infrastructure projects, refinance debt, and repay arrears in some countries, it has also been accompanied by an underlying deterioration of debt burdens as measured by the debt service ratio.
These include geopolitical risks, a surge in inflation, and a sudden jump in long-term interest rates and urged central bankers to maintain easy policies to support growth.