Analyzing the implications of Nigeria’s N77 trillion debt Post-World Bank/IMF Meeting

The Permanent Representative of the Centre for Convention on Democratic Integrity (CCDI) to the United Nations Economic and Social Council (ECOSOC ), and Chairman, CSO-African Countries Group of World Bank, Civil Society Policy Forum (CSPF), Mr. Olufemi Aduwo, has said while many academic research may argue that increased borrowing increases GDP and household income, this is obviously not the case for Nigeria as it is clear from statistics and the faces of the masses that increasing government debt and loans have amounted to increasing poverty, which can only be attributed to the poor fiscal management in Nigeria.

Aduwo said this just as he returned from the World Bank/IMF meeting in Morocco recently.

Aduwo cited that the Fiscal Responsibility Commission, just like other oversight Agencies in Nigeria lacks sanction power and is poorly supported.

He said the existing fiscal structure in Nigeria somewhat promotes the lack of accountability, transparency and corruption.

Citing an instance, he said the Government Audit Reports from the Auditor General’s office are never made for public usage or access.

He stated that even the National Assembly and Presidency over the years have ignored this lack of transparency in public reports.

Commenting on the falling value of the naira, Aduwo said the first reason, which is also the root cause of the naira depreciation, is that the supply of dollars into the economy has been declining while demand for dollars remains relatively unchanged courtesy of the country’s huge demand for dollars fuelled by dependence on imported goods for many economic activities.

He cautioned that devaluation makes a domestic currency less expensive than other currencies, which has two main implications, according to the International Monetary Fund (IMF). “First, devaluation makes the country’s exports relatively less expensive for foreigners.

Commenting, also, on debit forgiveness, Aduwo said Nigeria is not only indebted to the World Bank and IMF, but Nigeria borrows from China, London and Paris Clubs as well.

He recalled that in 1999 when democracy returned to Nigeria, the country’s total debts stood at $28.04 billion.

The figure dropped to $2.1 billion on the famous debt relief secured by President Olusegun Obasanjo. It went up to $7.3 billion under Dr. Goodluck Jonathan in 2015.

Under Buhari, the figure rose by as much as over 400 per cent to $41.8 billion.

In October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18 billion and an overall reduction of Nigeria’s debt stock by $30 billion.

The deal was completed in April 2006 when Nigeria made the final payment and its books were cleared of Paris Club debt. “I doubt if such grace would ever be available to us again, for many obvious reasons,” he noted.