Actions reminiscent of the Nigeria’s debt forgiveness era is playing out as the federal government has decided to refinance the nation’s debts.
Addressing journalists at the end of the launch of the regional economic outlook for sub-Saharan Africa in Abuja Tuesday, the minister of finance Mrs Kemi Adeosun disclosed that “government is refinancing debts with short term maturity to match tenure of projects. Our problem is debt servicing which is too high. The amount of interest is significant.”
The reason for refinancing the nation’s debts she said is because the government was servicing the nation’s debts faster than it is using the money to deliver on the projects the monies were meant for.
According to Adeosun, “our revenue is too low that is the problem. We are working hard to address this. The solution is not that we are borrowing too much but that our revenue mobilization has to be improved.”
On his part, the Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele described the impact of the apex bank’s forex intervention as positive “because more businesses are now able to access forex which will lead to more productivity.”
The CBN governor also noted that the Economic Recovery and Growth Plan (ERGP) of the government “has bold plans both Monetary and Fiscal authorities are committed to to ensuring its success.”
Another issue which got significant attention during the launch of the economic outlook was the issue of Non-Performing Loans (NPL). Speaking on this issue, Emefiele said the CBN was “working very hard to address NPL to get back to levels set by regulatory authorities.”
The International Monetary Fund (IMF) coordinated report on Sub-Saharan Africa economic outlook projected a modest growth for the continent at 2.6% in 2017.
Three countries -Nigeria, Angola and South Africa – the continent’s largest economies were tipped as countries that will contribute about three quarters of the region’s expected growth.
The forecast, including other draw backs that held down the sub-sahara region from growing at fastest economic pace, were contained in the IMF regional report on Africa unveiled yesterday in Abuja, first time the report was launched in any Africa nation.
The IMF Director (African Department) Mr Abebe Aemro Selassie, projected Nigeria’s growth at 0.8% post-recession. “The 0.8% forecast growth, he said is conditional and premised on “a higher oil production subject to, if peace in the Niger Delta can be maintained- and strong agricultural production”.
The report observed that growth in sub-Saharan Africa remains fragile as growth was slowed considerably in 2016.
“In 2016, growth slowed in about two-thirds of the countries in the region, accounting for 83% of regional GDP- and is estimated to have reached just 2% . This marked the region’s worst performance in more than two decades. Even the modest rebound to 2% expected in 2017 will be to a large extent driven by one- off factors in the three largest countries- a recovery in oil production in Nigeria, higher public spending ahead of election in Angola, and the fading of drought effects in South Africa”.
To correct the economic imbalance bedeviling the sub region, the report called for “urgent policy action to address macroeconomic imbalance in resource intensive countries, and to preserve existing momentum elsewhere.”
Responding, Mrs. Kemi Adeosun said “we have tried to mitigate these pressure through series of interventions , such as growing the non- oil sector base through increased efficiency of tax and customs collections, reduced cost of doing business , support for agriculture, infrastructure and manufacturing as well as reflating the economy through special fiscal support to sub nationals among several measures”.
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