Government Latest People TOP STORIES World

Lack Of Transparency Make Debt Risk A Bigger Problem-World Bank

The World Bank Group and the International Monetary Fund (IMF) have warned Nigeria, South Africa, and other low-income nations to be careful with borrowing because the international lenders are adding to their heavy debt profiles.

Mr. David Malpass, while speaking at a World Bank Forum at Washington DC on Monday, stated that these development banks and IFIs were further worsening already-challenging debt situations.

“We have a situation where other international financial institutions and to some extent development finance institutions as a whole, certainly the official export credit agencies, have a tendency to lend too quickly and to add to the debt problem of the countries,” Mr. Malpass said.

“In the case of Africa, the African Development Bank is pushing large amounts of money into Nigeria, South Africa, and others without the strongest program to sustain it and push it forward.

“In Kazakhstan, the EBRD is pushing forward with loans where lots of work is put in by other institutions and then the lower-interest-rate investment is made.

“And so, we have a very real problem of the IFIs themselves adding to the debt burden. And there’s pressure then, I think, on IMF to sort through it and look at the best interest for the council.

The latest figures by the Debt Management Office (DMO), as in September 2019, reported that the total debt profile of Nigeria stood at N26.2 trillion, with Total External Debt at N8.3 trillion while the Total Domestic Debt was at N17.9 trillion.

The World Bank, through its fund for the poorest countries, the International Development Association, said it would be implementing a new set of lending rules on July 1, 2020, as it unlocks a new round of funding expected to make some $85 billion in loans and grants available.

According to Mr. Malpass, these are aimed at setting new standards for transparency and require coordination with other multilateral lenders working with the same country.

During the event, the IMF Managing Director, Ms. Kristalina Georgieva, warned that the interest cost derived by a high volume of debt may take away precious resources from people in low-income countries like Nigeria.

“Why I worry so much about debt in low-income countries, because what it means is that if it is not properly managed, interest rates, often high, take away precious resources from education and health and infrastructure investments,” she said.

 

Topics

Connect With US




Loading…

%d bloggers like this: