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Nigeria: World Bank cautions Nigeria against over-borrowing

20.04.2017

The World Bank has cautioned Nigeria and other African nations against excessive debts, urging a balance between massive spending for development on the one hand and moderation in borrowing on the other.

Chief Economist for African Region, Albert Zeufack, spoke on the latest update on the continent's economy, Africa's Pulse, via webcast from the bank's headquarters in Washington DC, USA, yesterday.

He said: "What is good for Nigeria is that debt to the GDP ratio is still low but the debt to revenue ratio is already high.

"The environment of weak economic growth comes at a time when the continent is in dire need of necessary reforms to boost investment and tackle poverty. Countries also have to undertake much-needed development spending while avoiding increasing debt to unsustainable levels.

"Fiscal restructuring is going to be challenging and the government has to be careful in order to balance efforts to develop the country with a moderation in borrowing."

Responding to questions from Nigeria, the Chief Economist admitted that the libralisation of the exchange rate, being advocated by some international organizations, could create inflationary pressures but that with tightening of monetary policies, inflation would reduce.

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