The World Bank said Monday that Nigeria has failed to meet full disclosure rating conditions on debt reporting for three consecutive years, adding an ugly remark to the nation’s unpleasant debt story.
Nigeria’s public debt stock has risen significantly in the last five years as the country battles economic headwinds emanating from covid-19 and poor fiscal policies. Nigeria’s total public debt stock stood at N41.60 trillion or $100.07 billion as at March 31, 2022, according to data from Debt Management Office (DMO).
The report said the World Bank has in the last three years been monitoring how transparent Nigeria is in its debt reporting practices and found that it did not meet “full disclosure” policy it set for International Development Association (IDA) countries.
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“Global studies indicate that debt transparency directly contributes to higher credit ratings, lower borrowing costs, and foreign direct investment (FDI) inflows. Hence, the debt management office took the strategic stance to focus on debt transparency efforts and took several actions to improve public debt reporting and disclosure,” it said.
The Washington-based financial body said that Nigeria failed to publish Annual Borrowing Plans (ABP), adding that guaranteed and non-guaranteed debts were not reported while information on recently contracted loans was also not provided.
The World Bank said these are indicators that Nigeria did not meet the “full disclosure” rating for every single one of the nine categories on the debt transparency Heat Map.
According to the financial organization, debt transparency Heat Map involves data accessibility; instrument coverage, sectoral coverage, information on the contracted loans, periodicity, time range, debt management strategy, annual borrowing plan and other debt statistics/ contingent liabilities (CLs).
Nigeria has been borrowing internally to meet its budget shortfalls. Domestic borrowing accounts for more than 70% of the country’s total debt, including the central bank’s Ways and Means Advances that has topped N19 trillion, according to data from the DMO.
Ways and Means Advances is a loan facility through which the Central Bank of Nigeria finances the government’s budget’s shortfalls.
While there is growing concern over Nigeria’s rising public debt, whose servicing is currently taking about 95% of the country’s revenue, the Ways and Means Advances has become another cause for alarm.
The CBN admitted that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy to the detriment of domestic prices and exchange rates.
“The direct consequence of central banks’ financing of deficits are distortions or surges in monetary base leading to adverse effect on domestic prices and exchange rates i.e. macroeconomic instability because of excess liquidity that has been injected into the economy,” it said on its website.
Last November, the World Bank also warned the Nigerian government against borrowing from the CBN to finance budget deficits, saying it puts fiscal pressures on the country’s expenditures. In addition, borrowing from the CBN through the Ways and Means Advances will increase the cost of debt in Nigeria, the World Bank said.
I don’t think voting whether 100% or 200% is gonna be a lasting in any way. Who are you campaigning for? Just call out his name. Simple. In Nigeria we have 3 tiers of Gov. Fed state and LGs. No way any meaningful progress would ever be made unless Nigerians change their mindset towards voting. They have to react a litre of kerosene in order to vote. They have to reject pack of Indomie or Eva soap. Nigerian must vote for credible persons at every level irrespective of national or regional party. One other thing you didn’t mention is the role of the western world in toppling govs in developing economies. We have seen uncountable examples including Sri Lanka and Sudan. Nigeria has dodged same bullet during endsars. I don’t think there is any force that would come more than it. And one other thing is that impact of Covid 19 is not confined to Nigeria. Decline of economies and rising debt profile is not confined to Nigeria. In fact we are doing far better. Far better than many. If not because of that we would have followed the way of Venezuala and other collapsing economies. So while we do have issues that requires urgent attention it is not as its projected by IMF/World Bank. We have our data. We have our analyst. We are not fools to accept any type of senseless figure thrown at us to justify exploitative foreign interventions. We need to have a domesticated economic models to solve our own peculiar problems. Another key issue is endemic corruption. Yet we never agreed it’s a problem. How many single individuals in Nigeria steal what can revive Sri Lankan economy. Many.