Connect with us

news

Nigeria’s $64bn debt overhang raises fresh concerns

kemi-ade-254x300

Ten years after Nigeria exited the London and Paris Club debts through debt buyback that reduced its obligations from $35 billion to $5 billion in 2006,  the country is again in the throes of  a deeper debt mess.
Latest official statistics have it that in just ten years, 2006 – 2016, the nation’s borrowing and outstanding interest have exceeded its London and Paris debt levels and now threatening to compound its economic recovery efforts.
This comes amidst Monday’s warning by Fitch Rating that Nigeria’s weak growth may make it difficult for theFederal Government to contain its rising debt burden.
The firm which has substantially cut its growth forecasts for Nigeria to reflect a weak performance in the first half of the year and continuing policy challenges, including the new foreign-exchange regime and delays in the disbursement of the 2016 budget, also warned that real GDP could contract by 1per cent in 2016, compared with its earlier forecast of a 1.5per cent expansion.
Faced with daunting economic challenges exercebated by over 60 per cent crash in crude oil prices, the sentiment for the Buhari administration appears to be borrow from all avenues that offer low interest rate.
As at December 15, 2014,  Nigeria’s external debt   obligations was a mere $10 billion while domestic liabilities totalled was $50 million after former president Goodluck  Jonathan government borrowed $1.1 billion from China in July of 2013 for “Abuja light rail” project and airport repair to be repaid in 20 years at an interest rate of 2.5 per cent. Jonathan government also launched an almost $1 billion loan, a $915 million concessionary loan from the World Bank to be repaid in 40 years after seven  years loan-draw period.
Other borrowings that ballooned the country’s debt profile include the  $4.4 billion from the World Bank with $1.8 billion disbursed and the rest attracting service charges and another $1 billion from the International Development Association.
The government also borrowed  $1 billion to supposedly fight Boko Haram, a situation that painted a picture of a nation that lives on borrowing.
But some stakeholders are worried that Nigeria’s current borrowings to finance  infrastructure developments on crippling loans could send the nation into slavery in the next 40 years.
Only recently, the Buhari administration received a $1 billion loan from the African Development Bank which said it could also  borrow more than $4 billion over the next two years as it seeks to shore up its budget.
The loan, African Development Bank (AfDB)  president, Dr  Akinwumi Adesina,  said in an interview in Abuja, will have a 40-year term and comes with an interest rate of 1.2 per cent.
The development finance institution will also invest in agriculture and energy, he said.Nigeria doesn’t have a debt crisis, but a revenue challenge. The loan is shortly going to the board for approval.”  he said.
But Kemi Adeosun, the nation’s finance minister remains upbeat that the Buhari administration would continue to leverage the prevailing low interest rates in the global financial markets to borrow more to finance needed infrastructure projects and fund its N2.2trillion budget deficit for 2016, a further indication that Nigeria may borrow more to augment its revenue shortfalls.
Despite a whopping $6 billion funding pledge it got from China to fund infrastructure projects  following President Muhammadu Buhari’s state visit to Beijing last April, the Federal Government may still be eyeing some concessional credit windows in the South East Asian corridos to finance its projects.
According to the Director General of the Debt Management Office (DMO), Dr Abraham Nwankwo, Nigeria’s debt to GDP remains sustainable even as Nigerians have continued to express worries the spike in the country’s debt profile could be another time bomb for future generation.
He said that the external debt stock was currently about 23 per cent of the export earnings, compared to the applicable threshold is 150 per cent, adding that this is seven times stronger than it needs to be.
“Similarly, the external debt service  is currently about 0.74 per cent  of total export earnings, compared to the applicable threshold of 20 per cent: this means that this liquidity indicator is 27 times stronger than what is required to guarantee that the external debt can be serviced as and when due.  In addition, there is an administrative safeguard: since 2005, Nigeria’s prudential public debt management practice has been that debt service charge is the topmost item in the sequence of the line of expenditures in the budget.  Only very few other developing economies could boast of such a healthy and attractive external debt condition” the DG, explained.
Nwankwo also argued that Nigeria’s external debt is uniquely of top investment grade and this is the reason that in spite of global economic and financial tribulations, Nigeria’s Eurobonds have continued to trade creditably at stable low yields relative to the weight of the challenges and compared to other countries’ eurobonds.
For instance, as at June 30, 2016 the nation’s total debt was $61 billion (N16 trillion) made up of outstanding external debt stock for states and federal Government is $11 billion (N3 trillion), domestic debt for federal Government is $37 billion (N11 trillion) and
domestic debt for states is $12 billion (N3 trillion).

Continue Reading
Click to comment

Leave a Reply

news

12-year-old boy kills landlady as condition to be initiated into a cult

Ethiope East Local

A 12-year-old boy, who allegedly robbed and killed his landlady at Abraka, Ethiope East Local Government Area, Delta State, yesterday, was among those paraded for various offences by the state Police Command, yesterday.

 

The state Commissioner of Police, Mr. Zanna Mohammed, who briefed reporters on the arrest of over 60 kidnappers, robbers, murderers, cultists and ritualists in the last three weeks, said the teenager confessed that he committed the act because a cult group told him that one of the conditions for initiation was that he must have been involved in a criminal act.

Continue Reading

Headlines

Super Falcons striker, Asisat Oshoala, comes to Falz defence with regards to statement about glorifying fraudsters

Asisat Oshoala

Nigerian professional footballer, Asisat Oshoala, who plays as a forward in the Chinese Women’s Super league for Dalian Quanjian F.C., took to her Instagram to express deep concern about how people are now proud to be fraudsters.

 

 

In Falz’ defense, she insisted fraudsters shouldn’t be glorified.

Continue Reading

Foreign

Zimbabwean Church leader in s*x scandal as photos naked photos and sex acts with 33 girls is exposed

Church leader
A Zimbabwean church leader, Nyasha Light Nyatsungo is enmeshed in a sex scandal and might also be facing legal action, after his ex-girlfriend flooded social media with his nude photo.
It was gathered that the Nyatsungo allegedly sent a nude picture of his Cape Town based ex–side chick, Shingi Mavenge, to his other girlfriend only identified as Beula who later broadcasted it on social media.
According to H-Metro, in an apparent fit of rage, Mavenge posted a WhatsApp chat she had with Nyatsungo’s wife identified as Nyasha Nhahumbi as well as a group chat with some of her former lover’s concubines.
According to Mavenge, she has gotten information that Nyatsungo has at least 33 girlfriends and has ditched his wife of eight years.
She adds that Nyatsungo bedded a girl who was their neighbour as well.
Mavenge said that the church leader’s wife revealed that they even consulted their local pastor in Mutare who failed in his attempts to mend Nyatsungo’s ways.
According to H-Metro, Nyatsungo, a married father of two, has denied ever circulating the picture, labelling Mavenge as a bitter woman whom he just flirted with on Facebook and nothing more.
“This Nyasha guy must be stopped in his tracks. He is going to pay for all the damage that he has done to me. He was the only one who had that leaked picture and I am shocked why he would forward it to some other girl,” fumed Mavhenge who is working on taking legal action.
 
“I started dating this guy in 2015 and never knew he was married. He lied.”  fumed Mavenge yesterday.
“That guy is full of lies and at some point, we opened a group chat with his wife and some of his girlfriends. He normally targets single mothers” added Mavenge.
H-Metro was furnished with six other cellphone numbers of his girlfriend that include Fadzai, Mutsa, Essy, Juliana, Barbra among others. Mutsa confirmed she once had a relationship with Nyatsungo have since terminated it since she discovered he was married.
Mavenge confirmed they met once in Johannesburg when she had to fly from Cape Town to meet her man sometime in April.
“That night he didn’t even have money. I had to pay the R800 for the accommodation as he had no money. He wanted to have sex with me but I flatly refused. He even wanted it without protection and I said No. he looked terrible with clothes in a plastic shopping bag. I want to write a letter to Pastor Rex who is the head of (the church) in Harare so that this guy be stopped with his tricks and lies,” added Mavenge.
When contacted over the phone in Mutare Nyatsungo confirmed he knew Mavenge but never had a relationship with her.
“I know her and we once flirted on Facebook. We never had a relationship as she is alleging. I don’t know why she is bitter. I haven’t seen the nude pictures she is talking about but I heard about it from Beula. We live in a democratic country. She can go ahead and sue me if she feels her rights have been infringed upon. All the allegations she is making are false and I don’t know her motive in trying to tarnish my image,” said Nyatsungo.
He said he was still with his wife whose phone rang without response yesterday afternoon. Despite his denials, H-metro was furnished with pictures of Nyatsungo and Mavenge, the time they met in April.

Continue Reading

Trending