Gwamcee News
As Nigeria’s total public debt rises to N87.38 trillion, the Central Bank of Nigeria (CBN) has issued a warning to Nigeria and other West African countries about a concerning trend in how countries borrow money.
The Debt management office (DMO) last year stated the public debt rose in the second quarter (Q2) of 2023, recording an increase of 75.29 percent.
Report says traditionally, nations often relied on loans from the Paris Club, a group of creditor countries. However, the CBN has observed a significant shift towards borrowing from non-Paris Club members and private lenders, such as banks and investors who buy government bonds.
With the rising rate of debt, the West African Institute for Financial and Economic Management (WAIFEM) has also joined the fray, saying that Nigeria is at a high risk of falling into debt distress. It has therefore urged the Federal Government to look for ways of improving on its revenue generation.
Governor of the CBN, Dr. Yemi Cardoso gave this warning yesterday in Abuja at the Joint World Bank/IMF/WAIFEM Regional Training on Medium Term Debt Management Strategy.
Cardoso, who was represented the Director, Monetary Policy Department of the CBN, Dr. Mohammed Musa Tumala, said while this change in countries that owe money might seem like a minor detail, he emphasized that it is a critical development with serious implications.
He said the way countries manage debt owed to the Paris Club may not be as effective for these new lenders, stating that this new debt landscape could pose a threat to financial stability and economic recovery for many countries.
He explained that public debt dynamics are increasingly influenced by significant debt servicing obligations to non-Paris Club members and private lenders, including commercial banks and bond investors.
Cardoso added that this shift in the debt structure represents a critical evolution in the global financial framework with profound ramifications for public debt management in our countries.
