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N77trn Debt: IMF warns Nigeria against more foreign loans



N77trn Debt: IMF warns Nigeria against more foreign loans



NaijaNews reports that with rates rising globally and investors moving funds out of emerging economies, Nigeria, which plans to fund a large part of its 2023 budget through borrowings, may find it hard to get foreign loans.



This was stated by the deputy divisional chief of the International Monetary Fund (IMF), Wenjie Chen, during a keynote presentation at the IMF Regional Economic Outlook in Lagos.



Nigeria is currently grappling with a huge debt overhang of over N77 trillion and the need to increase revenue generation to meet expenditure requirements.



Nigeria’s total public debt stock hit N46.25 trillion at the end of December 2022, data by the Debt Management Office (DMO) indicates.


With N23.77 trillion in ways and means and other planned borrowings to fund the 2023 budget, the debt overhang continues to rise.



This is even as the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, affirmed that emerging markets are finding it difficult to access foreign loans.



Chen had noted that borrowing costs, high interest rates, and the increasing value of the dollar have continued to put a strain on Nigeria’s economy and that of its sub-Saharan African counterparts, adding that, due to the uncertainties surrounding the global economic environment, loans from China as well as other advanced economies to Africa have been on the decline.



The IMF deputy divisional chief stated that, “in terms of the funding squeeze, the three main manifestations that many countries are facing are: the rise in borrowing costs. You can see that virtually all the frontier markets have been shut out of the Eurobond markets since the spring of 2022. What that means is that they cannot raise financing on these international markets.



“The eurobond market has been a large component of financing for these countries. What this has meant in terms of the global economy’s reaction to the Russia-Ukraine war in terms of rises in price and the cost-of-living crisis has placed very high interest rates.



“Not only were interest rates rising, but the value of the dollar rose to a 20-year high last year. For many African countries, the cost of servicing these debts has also gone up. Inflation is still a major concern for many African economies. Many countries are still going through recovery after the pandemic.”



To address the many issues confronting the Nigerian economy, Chen said the IMF’s policy advice to Nigeria is based on four key policy priorities: fiscal policy, monetary policy, exchange rate policy, and structural reforms.



She said the new emphasis on addressing the current liquidity squeeze should focus on reducing off-budget commitments (extra-budgetary spending, arrears, guarantees, etc.), enhancing debt management, and mobilizing domestic revenue.



On forex-related challenges, Chen said significant exchange rate pressures in the past year largely reflect global factors such as terms of trade changes and monetary policy normalization. Noting that the scope of forex interventions is limited in many cases by low foreign reserves, she said Nigeria and its counterparts would have to adjust to new fundamentals.



Also, IMF representative for Nigeria, Ari Aisen, said with the funding squeeze, it would be critical for Nigeria to rely on internally-generated funds, adding that for Nigeria’s economy to react positively to this funding squeeze, the private sector needs good macroeconomic policies to thrive.



The IMF, he said, remains confident in its earlier projection that Nigeria’s economy will grow by 3.2 percent this year. “In Nigeria, we always believe that growth has the potential to be much higher, but because of the shocks since the pandemic and the food price shock because of the Russia-Ukraine war, the economy managed to grow by three per cent. We are forecasting 3.2 this year.



“It could be higher. It’s helped by services, which are the main driver of growth on the supply side of the economy. The oil sector has not also contributed as much as it should have, partly because of investments in the sector and partly because of leakages, particularly oil theft. These issues are gradually being addressed, and we are hopeful that it will continue, so we are now projecting 3.2 percent growth,” he said.



Economic analyst Stephen Kanabe said the warning from the IMF is a cautionary call on the federal government to adjust to a shrinking global economy.



Kanabe said at a time of such economic meltdown as is currently being experienced, Nigeria needs to look inward, get more innovative, and expand revenue generation sources to brace for the shortfalls.



“Nigeria has borrowed enough from local and foreign markets. The IMF warning should come to us as a call to look inward and find a way around revenue generation without necessarily causing much stress on Nigerians. We are already overstretched.



“The government can take the issue of expansion of the tax net seriously, deal with the issue of oil theft, and even sell some of the properties that were forfeited to the Economic and Financial Crimes Commission (EFCC),” Kanabe said.



Earlier at the third edition of the RT200 Export Summit on Tuesday, CBN governor Godwin Emefiele said there had not been any significantly successful eurobonds in the past year as investors pulled out over $100 billion from emerging markets.



“Due to the global financial conditions in which we find ourselves today, where rates at the global market rose, we saw almost about $100 billion move from emerging markets back to the United States (US). Rates had gone high, and there had been tremendous difficulty for emerging markets in their ability to source foreign exchange.



“I am not sure that in the whole of 2022 we saw any significantly successful Eurobonds because of the tight financial market, and that is the reason we continue to appeal that a lot of work still needs to be done here in Nigeria,” Emefiele said.



Looking at the implications of accumulating foreign loans, the director of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, stated that the implication of Nigeria’s debt profile is the burden of servicing the debt, which has been on the rise, adding that “this means that less resource is available for the development of the economy, investment in infrastructure, and investment in social services.”



He also said it had a crowding out effect in the financial market for the private sector, saying, “The implication of high debt service is that the level of borrowing will be increasing, and most of the borrowing is done domestically.



“Also, it creates a visual circle of indebtedness or a debt trap because, as the debt profile is increasing, the burden of debt service is also increasing also. Already, close to 80 percent of our revenue is used to service debt. If the debt continues to increase, that means more of our resources will be used to service debt.”



According to Yusuf, “this is a challenging situation, and the way out of this is for us to see how we can pursue more rigorous fiscal consolidation. Looking at how we can boost our revenue, the level of revenue coming to the government is extremely low for the size of our economy.



“We need to do a lot more, and one of the things we can do is unlock more revenue by addressing the issue of subsidy. With this, we should be able to unlock about $7 trillion or more.



“Also, by putting an end to foreign exchange subsidies, we should be able to unlock some revenue of about N4 trillion, increase oil output, and address the issue of corruption.”



He explained that “this will enable us to use our money in a transparent and productive manner. We need to check the quality of our spending. This is not only a revenue issue but also an expenditure issue. We need to cut down on the cost of governance.”



Similarly, the national president and chairman of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Ide Udeagbala, said, “It is now obvious that the current levels of debt servicing payments are considerably too high and unsustainable given the dwindling government revenues. We call for urgent structural reforms of our economy towards a transformational production economy and effective and efficient management of our debt profile to enhance the productivity level of the country.”



Udeagbala added that “as the leading member of the organized private sector, NACCIMA strongly advocates once again for less dependence on debt financing and ensures effective implementation of the budget to address the productivity challenges of the economy.”



He stressed the need for fiscal policies and public expenditure controls at various government levels to keep the nation’s debt profile in check and make available resources to fund other government priority projects.


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Justice Rahman Oshodi of a Lagos Sexual Offences and Domestic Violence Court, yesterday, sentenced 42-year-old Suleiman Usman to life imprisonment for defiling his daughter.




Justice Rahman Oshodi of a Lagos Sexual Offences and Domestic Violence Court, yesterday, sentenced 42-year-old Suleiman Usman to life imprisonment for defiling his daughter.


The judge sentenced him after he was found guilty as charged.

NaijaNews reports that the Lagos State government had arraigned Usman on a two-count charge bordering on defilement of his two daughters, who were eight and five years respectively, at his No.2 Bale Street, Onisewo in the Apapa area of Lagos State.

The defendant was 37 years when he committed that offence in 2018, while the survivors were eight and five years.

His offence contravened the provisions of section 137 of the Criminal Law of Lagos State 2015.

He had pleaded not guilty to the two counts charge.

Usman was first arraigned before Justice Sybil Nwaka, sometime in October 2019 before the judge was elevated to the Court of Appeal and the case file was reassigned to Justice Oshodi wherein he was re-arraigned on two counts of charge.

He also pleaded not guilty to the two counts and the prosecution commenced trial.

During the trial, the prosecution called four witnesses, among which, was the first survivor, the eight-year-old, the Investigative Police Officer (IPO), the defendant’s wife and mother of the survivors, and a medical doctor from Mirabel Centre.

In her testimony, the survivor identified the defendant as her father and narrated how she was repeatedly defiled by the father.

She further testified of informing her school teacher, who is close to her mother.

She told the court that she did not tell her mother because the defendant had warned and threatened that she would die if she did so.

In her testimony, the defendant’s wife narrated how she discovered that her two daughters were defiled when she took them to the hospital.

She described their house and noted they all sleep in a room, adding that their parlour is not attached to the room.

Under cross-examination, the survivor’s mother told the court that there was a night she met the defendant and her daughter in their parlour.

But the defendant told the court that his wife lied against him because he wanted to marry another wife and relocate her to the village.

However, Justice Oshodi in his judgment, yesterday, exonerated the defendant of the second charge.

The court held that the prosecution failed to prove the second charge against the defendant, as the second survivor did not testify to the second charge related to her defilement.

On count one, the court held that the testimony of the first survivor corroborated the medical doctor’s testimony.

The court said that he has considered the ingredients of the offences, the confessional statement, circumstantial evidence and the eyewitness account and therefore sentenced him to life imprisonment.

The judge also directed that his name be registered in the Sexual Offenders’ Register of Lagos State.

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BREAKING: Raymond Dokpesi DAAR Communication Founder is Dead




BREAKING: Raymond Dokpesi DAAR Communication Founder is Dead


The Chairman of DAAR Communications Ltd, High Chief Raymond Dokpesi, is dead.


He was aged 75. He was the founder of AIT/RAYPOWER, a leading media outfit in Nigeria. ROYAL NEWS reports that Dokpesi died on Monday in his Abuja residence.

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Peter Obi Discusses Attending Tinubu’s Inauguration and Proposed Protest




Peter Obi calls for calm after being spotted at Asaba Airport on Tuesday after Saturday’s presidential election

Peter Obi Discusses Attending Tinubu’s Inauguration and Proposed Protest

The presidential candidate of the Labour Party (LP) in the 2023 election, Peter Obi, has said he would not be attending the swearing-in ceremony of the President-elect, Asiwaju Bola Tinubu.

The former Governor of Lagos State would be sworn in as the 16th democratically elected President of the Federal Republic of Nigeria today at Eagle Square in Abuja.

Speaking to reporters in Abuja through his media aide, Tai Obasi, the LP flagbearer said it will be ‘extremely weird’ of him to attend Tinubu’s swearing-in when he is challenging his electoral victory in court.

Obasi noted that even though his principal is a very humble and reasonable man who is always looking for peace and unity in the country at all costs, he cannot act that weird and unreasonable.

The media aide, however, failed to confirm if the Labour Party leadership and Obi were sent individual invitations to the swearing-in ceremony.

He said, “My principal is a very humble and reasonable man who is always looking for peace and unity in the country at all costs. But it will be extremely weird for him to attend a ceremony of a man whose election victory he is challenging in court.

“My principal cannot act that weird and unreasonable. I can’t confirm if he receives an invitation to the swearing-in ceremony. But I am telling you that you can’t see him there.”

Speaking further, Obasi also denied rumuors that the former Anambra State governor is planning a demonstration ahead of today’s inauguration.

He said, “I don’t know where that report is coming from. We don’t know anything about it or who is behind the proposed protest. But I can categorically tell you that my principal is not aware of anything.

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“He is Obi and his followers are Obidient. I agree that on some occasions, they may act on their own, no matter how you tell them to keep calm. These guys are angry. They are not happy about how everything was manipulated against Obi who has given them so much hope. They followed him and waited for him all the way.”

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