Nigeria’s minister of Finance, Kemi Adeosun, says Nigeria needs to “tolerate more debt” in other to deliver on infrastructure development and create jobs.
Adeosun said this on Sunday at a joint press conference with Godwin Emefiele, governor of the Central Bank of Nigeria, on the sidelines of the 2017 World Bank/IMF Annual meeting in Washington DC.
According to her, Nigeria’s debt to GDP is ratio one of the lowest in the world, hence the need for the Muhammadu Buhari-led administration to borrow more without endangering the economy.
She however assured that the current administration is very prudent around debt, adding that the finance ministry and Debt Management Office (DMO) have been monitoring state governments to ensure that they don’t borrow more than they can service.
“Nigeria’s debt to GDP ratio is one of the lowest. We are at 19%, but most advanced countries have over 100%. I am not saying we need to move to 100%, but I am saying we need to tolerate a little more debt in the short-term to deliver the rails, the roads and power so as to generate economic activities, jobs, revenue, which would be used to pay back the debt,” she said.
“I assure you that this government is very prudent around debt. We don’t borrow recklessly and we have no intention of bequeathing unserviceable debts on Nigerians.
“Any state government has to come to us to get an approval to borrow. We perform debt sustainability analysis and if the repayment is more than 40 per cent of their revenue, we turn it down. So many people are talking of how many loans we are approving, they don’t talk about how many loans we are turning down.
“Many do not go through and we are constantly monitoring state governments to ensure that the debts that they take on is sustainable. The problem with some of the states that have debt problems are legacy issues that were there before they came in. But since, we came in, we have been very strict, trying to make sure states do not borrow more than they can service.”