Although Nigeria’s total current debt is relatively low compared to the Gross Domestic Product, the interest rate payment is not sustainable by current revenues, the World Bank has said.

Senior Economist at World Bank office in Nigeria, Yue Man Lee, said this in Abuja on Wednesday on the sideline of the release of the 15th edition of Africa’s Pulse, an analysis of issues shaping the continent’s economic future.

For the interest payment to be sustainable, according to Lee, the country either has to increase its revenues or work towards balancing the debt profile to make way for more foreign debt rather than allow the continued dominance of local debt with high interest rates.

She said, “Nigeria’s debt to GDP ratio is relatively low. What is of concern is the ratio of interest payment to revenue. That is what is concerning. This reflects the fact that there has been a massive drop in revenues because of the drop in oil revenues.

“There are two main strategies to reduce this debt burden. One is to increase the revenues. Here, in order not to be vulnerable to the volatility of the oil sector, the critical thing is to increase the non-oil revenues like the VAT, the income taxes and the excises outside of oil. This is something we have been discussing with the government about.”

Lee added, “The other area in terms of interest payment is to look at the debt profile. Right now, most of the debt is domestic debt – short term domestic debt – and so, the government has already expressed the strategy to move towards external longer-term debt. You have seen them issuing Eurobonds successfully as part of that strategy.

“The key thing for us in terms of sustainability of the debt profile is raising revenues. That is just the key thing.”

Lee also spoke on the nation’s continuing foreign exchange crisis, saying that further liberalisation could lead to depreciation of the naira, but predicted recovery after a short while.

She stated, “Once it is liberalised, the market will determine the exchange rate. We don’t know exactly what the exchange rate will be. Possibly, it will depreciate further; but then, it may adjust back. These are the forces of demand and supply.

“If the exchange rate depreciates further than what it is at the interbank, there could be some inflationary impact. I think we should bear in mind that right now, a lot more of large scale transactions are possibly done outside of the official interbank exchange rate.”

The World Bank official added, “If a number of transactions are being carried out using the parallel exchange rate, the prices have already been incorporated into the current selling prices. So, it’s a question of how much of inflation impact.

“The second thing to note is that the government has chosen to manage the inflation impact, namely monetary policy. So, that is why the IMF recommended further flexibility in the exchange rate regime with tightening of the monetary policy.”

TippyTop:
Right under Dullardeen's nose, Angola took over as Africa's number one oil importer.

Rilwayne001:


Aren't your people the ones crippling the economy by bombing pipelines? why blame Buhari for the evil you are doing?

TippyTop:
How can we sustain repayments when we just lost number one spot to ordinary Angola?
Right under Dullardeen's nose, Angola took over as Africa's number one oil producer, unbelievable.

“The second thing to note is that the government has chosen to manage the inflation impact, namely monetary policy. So, that is why the IMF recommended further flexibility in the exchange rate regime with tightening of the monetary policy.”

Rilwayne001:


Aren't your people the ones crippling the economy by bombing pipelines? why blame Buhari for the evil you are doing?

TippyTop:
How can we sustain repayments when we just lost number one "Oil" spot to ordinary Angola?

Right under Dullardeen's nose, Angola took over as Africa's number one oil producer, unbelievable.

TippyTop:

Yar'adua was able to manage the militants,

why can't Dullardeen?

You were speaking like a normal person few weeks ago, what changed, is still the same Dullardeen's.

Sanchez01:

Sometimes I can't just help but shake my head at some posts. This has nothing to do with the top oil seller, so long we are still selling. The question is, what are we selling besides oil? Economic growth is an increase in real GDP; it means an increase in the value of goods and services produced in an economy. here are several factors affecting economic growth, but it is helpful to split them up into: Demand side factors (e.g. consumer spending) Supply side factors, etc, and as it stands, it's as if we don't offer these things. They were never there during Jonathan's time, and are not there now. so what's the fuss about?

Just so you know, the IMF and WB both have an agenda, and that is seeing that Nigeria devalues her currency further than it stands.

FriendNG:


Must you fight with everyone

Rilwayne001:

lol. how does asking question amounts to fight? you think everyone is a coward like you. hehehehe

Rilwayne001:


for what reason are the militant doing the evil they are doing? why didn't they do the same thing during GEJ's era? why did they take up arm again when buhari was voted in? what exactly do they want?



what exactly do you want him to do? after all he called for dialogue severally that they refused to acknowledge.



I've always been normal. maybe i m sounding abnormal to you because of your subjectivity.

FriendNG:


Hmm Mr. Brave lion. Today Buhari has spoil D economy, tomorrow it is ND fault. Next tomorrow u will blame Emefeli.

CROWNWEALTH019:
YourMain must see this

Rilwayne001:


he was blaming buhari for the bombing the militants were doing when actually we all know it was as a result of the election their kinsman lost. apparently no sane person will blame Buhari for this, which is exactly what I'm doing. still yet, that won't change the fact that Buhari is a failure.

TippyTop:


Our chief export remains oil, if we can't sell enough, it doesn't take a genius to predict the outcome.

TippyTop:
How can we sustain repayments when we just lost number one "Oil" spot to ordinary Angola?

Right under Dullardeen's nose, Angola took over as Africa's number one oil producer, unbelievable.