The Central Bank of Nigeria has warned Nigeria and other West African nations regarding trends in borrowing practices.

Traditionally, nations often relied on loans from the Paris Club, a group of creditor countries.

However, the CBN said it has observed a significant shift towards borrowing from non-Paris Club members and private lenders, such as banks and investors who buy government bonds.

The West African Institute for Financial and Economic Management has warned that Nigeria is at a high risk of falling into debt distress and urged the federal government to look for ways of improving revenue generation.

Governor of the CBN, Yemi Cardoso, gave the warning in Abuja at the Joint World Bank/IMF/WAIFEM Regional Training on Medium Term Debt Management Strategy in Abuja on Monday.

Represented by Dr Mohammed Musa Tumala, Director of the Monetary Policy Department of the CBN, Cardoso noted that while this change in who countries owe money to might seem like a minor detail, he emphasised that it is a critical development with serious implications.

He argued that the way countries manage debt owed to the Paris Club may not be as effective for these new lenders. Cardoso expressed concern that this new debt landscape could pose a threat to financial stability and economic recovery for many countries.

Cardoso said, “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.

“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.”

He also stated that recent events like the COVID-19 pandemic, geopolitical conflicts, and natural disasters have put a strain on many countries’ finances, making them more likely to seek loans from diverse sources.

However, these non-traditional lenders might come with stricter repayment terms and potentially higher risks compared to Paris Club loans.

“Following the COVID-19 pandemic, along with other developments such as geopolitical conflicts and natural disasters, the financial strain on our sub-region has escalated, posing a threat to their macroeconomic and financial stability and prospects for faster recovery,” he said.

Nigeria, despite being classified as having generally moderate debt risk, the CBN urged the federal government to remain cautious, particularly regarding potential liquidity risks. These risks, if not addressed effectively, could stem from weak revenue mobilization, a persistent challenge hindering debt sustainability and economic stability.

What the CBN is saying is that while Nigeria’s overall debt risk is considered moderate, the country still needs to be careful about its ability to pay back its loans (liquidity risk). This risk could become a problem if the government doesn’t collect enough revenue (money) in the future.

Dr Baba Yusuf Musa, Director General of the West African Institute for Financial and Economic Management told journalists, “When you compare Nigeria with the rest of the world or peer countries, you realise that with the 37 per cent debt to GDP ratio, we still have room to borrow but the issue with the Nigerian debt is you don’t use GDP to pay debts rather you use the revenue to pay for any debt”

He added, “If you look at it from the revenue side Nigeria is at a high risk of debt distress in terms of our borrowing so what we need to do now is to step up our capacity to generate revenue, the more revenue we have, the less ratio of debt to revenue we have.”

WAIFEM, he said, is “very much in support of what the federal government is doing because there is a window for the government to raise more revenue, all that the people need to do is to support the federal government diversify the sources of revenue and of course generate more sources of revenue, once we have this we don’t have debt problem but rather revenue problem.

He added, “What the Medium Term Debt Strategy does is that it smoothens the debt service so that going forward when borrowing, you take into consideration the redemption profile that you have and the type of loans that you have in your existing portfolio and then it will enable you also to minimise the cost and risk the future loans will add to the debt portfolio.”

https://www.google.com/amp/s/punchng.com/cbn-cautions-nigeria-others-against-debt-distress/%3famp

Will they hear? The politicians will keep borrowing without considering what impact their reckless and unbridled appetite for more money would have on the economy. When they drop the ball, they will start looking for magicians in the name of technocrats to perform miracles.

Hahahahahahahaha... The same people who are given the same monies borrowed to defend the flailing naira.
Only in Nigeria do you hear things like the government borrowing dollars to defend the naira against the same dollar they borrowed and pay interest on and the same dollar it seeks to earn as revenue

But wait oooo,
So if Nigeria hire another foreign coach
They'll pay him wit Naira 😳

Hehehe.

Africa can borrow eh.

The oga kpatakpa of them all is Nigeria. They even borrow from pension fund and even the dead men money in the bank.

Buhari if he was still in office would have borrowed from the spirits .

The funny thing is that most of the money borrowed in Africa is been looted by politicians.

The borrower is slave to the lender.

Bukum as usual!

if that guy that sang Nigeria jaga jaga years back want to sing the remix now I wonder what he will sing. We allowed a set of thieves grabbed it and they are running with it.touts and agberos said he built Lagos from ocean . Nigeria that is on a plain land is now difficult to build

We were warned about this Tinubu but tribalism and ijekuje made us forget d credential of an unrepentant looter whose wife claimed to have stole enough to their satisfaction.
Now they continue to loot and impoverish our Nation to d extent that an average income earned can hardly eat once a day.


What is God still doing? Did the Nigeria Churches God even exist? The level of suffering in towns and villages, orphans,old women , unemployed etc . There shouldnt be any powerful person not to say GOD that will stomach it.

Christianity is a big scam. No Christian God can fight for anybody.

Including 'ways and means' please ...

Those secret and illegal printing of Trillions for Thiefņubu is part of the mess we are facing today
.

I support this

Chai..

I always ask, where is the impact of the money they lend?
They lend and loot it back.

Who are u telling? Go and tell Emi lo Kan in his bedroom

Mr. Patch patch CV

Chai..


...so that we will not use growth and development's money to be paying back gbese!!

Nigeria might probably focus on tax now

Hmmm

Nope! Make una continue to borrow.

omoadeleye:
Nigeria might probably focus on tax now

Tax who?

Tax people that are finding it hard to buy bread to eat now again. .

Well, I don't blame you.

Last, time End SARS happened, remember Tinubu was lucky to fly off to France timely. .

That's just my take for you lots.

Am only angry on how the mismanaged money including loans

Okay na

He is advising Tinubu. He must have seen the damage he's doing to Nigeria

Nbote:
Hahahahahahahaha... The same people who are given the same monies borrowed to defend the flailing naira.
Only in Nigeria do you hear things like the government borrowing dollars to defend the naira against the same dollar they borrowed and pay interest on and the same dollar it seeks to earn as revenue

Sounds funny, isn't it? You go and borrow dollars to use it to defend the Naira against the same dollars you went to borrow. Ridiculous!

It's better to allow Naira fall into the bottomless pit than to engage in that type of stupidity

Alaye who is FG?

Kikikkiki.

Make una keep playing mind games with una e-zombie agents of defence.

oyeb15:
We were warned about this Tinubu but tribalism and ijekuje made us forget d credential of an unrepentant looter whose wife claimed to have stole enough to their satisfaction.
Now they continue to loot and impoverish our Nation to d extent that an average income earned can hardly eat once a day.


What is God still doing? Did the Nigeria Churches God even exist? The level of suffering in towns and villages, orphans,old women , unemployed etc . There shouldnt be any powerful person not to say GOD that will stomach it.

Christianity is a big scam. No Christian God can fight for anybody.

Keep disgracing yourself................