Nigeria must decisively tackle debt challenges, says AfDB’s Adesina
President of African Development Bank, AfDB, Akinwumi Adesina, yesterday asked the federal government to decisively resolve the nation’s debt challenges to trigger economic growth.
The Debt management Office, DMO. Had in September, put the country’s total public debt (federal and state governments) at N35.5 million at the end of the second quarter of 2021.
But speaking at the opening of a two-day mid-term ministerial performance review retreat in Abuja yesterday, Adesina said Nigeria’s debt service to revenue ratio was high.
He, however, acknowledged that the debt-to-GDP ratio remained “moderate”, adding that the economic resurgence was possible when Nigeria removes “structural bottlenecks” that limit the revenue-earning potential of non-oil sectors.
Adesina, who projected a rebound to 2.4 per cent growth rate for the economy , this year, with a possibility of hitting 2. 9 percent next year, however, said that growth in Nigeria required immediate action on the growing debt, noting that at 73 per cent, the nation’s debt/revenue ratio was too high.
He said: “The GDP growth rate for the continent will recover to 3.4% this year. We project Nigeria’s economic growth rate will rebound to 2.4% this year and reach 2.9% by 2022.
‘’The recovery will depend on two critical issues: access to vaccines and tackling debt issues. Nigeria must decisively tackle its debt challenges. The issue is not about debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35 percent is still moderate.
“The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth. The debt service to revenue ratio of Nigeria is high at 73 per cent.
“Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have economic resurgence, we need to fix the structure of the economy and address some fundamentals.”