The International Monetary Fund (IMF) has cautioned Nigeria and other developing countries from taking loans from China due to unfavourable loan conditions even as the Federal Government has allayed fears on the country’s escalating debt stock which rose from N21.12 trillion in 2015 to N24.38 trillion in 2018, saying the debt was sustainable.
Mr Tobias Adrian, on Wednesday during the launch of the Global Financial Stability Report for April, 2019 at the IMF/World Bank meetings in Washington D.C, U.S, said “Capital flows, which include capital flows from China are of course important for development.”
He added, “On the other hand, what is very important in lending arrangements are the terms of the loans and we urge countries to make sure that when they borrow from abroad the terms are favourable.
“In particular, we recommend that loans to countries should conform with Paris Club arrangements and that is not always the case of loans from China,” he said.
On Nigeria’s rising debt levels, Adrian said that the IMF was not overly concerned, as it would allow the country to invest more in developing critical infrastructure.
“At the moment, funding conditions in economies such as Nigeria and other sub-Saharan African countries are very favourable but that may change at some point,” he said.
The April 2019 Global Financial Stability Report (GFSR) finds that in spite of significant variability over the past two quarters, financial conditions remained accommodative.
As a result, financial vulnerabilities have continued to build in the sovereign, corporate, and non bank financial sectors in several systemically important countries, leading to elevated medium-term risks.
Also, the IMF in the April 2019 Fiscal Monitor Report urged Nigeria to increase Value Added Tax, increase and expand the coverage of excise duties.
The IMF commended the country’s latest Strategic Revenue Growth Initiative, which looks at a comprehensive approach to tax reform.
Minister of Budget and National Planning, Udoma Udoma, who gave this position at the end of the Federal Executive Council (FEC) meeting at the presidential villa, Abuja, said government was doing everything to widen it sources of income.
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The main opposition party, the Peoples Democratic Party (PDP), had, last Monday, accused the government of unwholesome borrowings, leading to the escalation in debt.
The party had argued that since President Muhammadu Buhari assumed office in 2015, there had been a culture of unexplained borrowings, leading to a steep rise in the debt stock from N17.5 trillion in 2016 to N21.72 trillion in 2017 and a huge N24.387 trillion in 2018.
When asked to respond to the situation, Udoma conceded that the nation had revenue challenges, but was hopeful that if government’s attempts to widen the tax net succeeded, the debt situation would change.
The minister said: “With regards to our debts, our debts are sustainable. We do have a revenue challenge and we are focusing on that. Once the revenues come up, it will be obvious that we don’t have a debt problem at all.
“We are working on a number of initiatives to increase our revenues. We are looking at initiatives to widening the tax base. We are looking at initiatives to increase efficiency in collections. We are looking at a single window, which will help to increase efficiency, custom collections. We are looking at many different ways to improve revenues.
“The debts are sustainable, every nation borrows. We are working on increasing our revenues.”
Udoma revealed that the FEC approved two contracts under the National Social Investment Programme, both of which are under N-Power programme.
He explained that the N-Power programme is a non-graduate programme that seeks to deliver accelerated training and certification skills to 75,000 Nigerians between ages of 18 and 35 years old.
“It is aimed at building a high crop of highly-competent and skilled workforce of technicians, artisans and service professionals, who will be trained and tooled and transitioned annually to take up jobs as electrical installation technicians, plumbing and pipe fitting installers, mason, carpentry and gentry experts, welders, fabricators, professional painters, built technicians and so on,” he explained.
Udoma said the focus had so far been zone by zone, adding; “Today, the contract for the South East zone of Nigeria was awarded to Hitech Investment Ltd at the sum of N122,800,000 million, and it covers all the states in the South East.
“The one for the North West zone was awarded to Noble Ventures Limited in the sum of N145,106,107 million and it covers all the states in the North West.”
Also speaking, the Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami, disclosed that the FEC had approved a web-based automated inter-connectivity system, which is a digitalised way of decongesting the prisons.
Speaking on prisons decongestion, he said: “At a point, it was said 70 per cent of prison inmates across the prison formations in the country were awaiting trials. Arising from these concerns, the Federal Government has been working to come up with policies, legislation and associated programmes that are targeted at decongesting the prisons.
“One of the policies put in place was the legislation of the criminal justice act, which has partially succeeded in addressing decongestion to an extent.
“Recall that Mr President had put in place an ad-hoc committee under the chairmanship of the FCT chief judge, Justice Ishaq Bello, to move around prisons in the country, look at the conditions and come up with suggestions.
“So, you are also aware that by the constitution, Mr President is vested with the prerogative of mercy targeted at setting free inmates who satisfy certain conditions.
“Arising from this, the office of the Attorney General presented a memo today (Wednesday), which is web-based automated inter-connectivity system, which is a digitalised way of decongesting the prisons.
“The idea is to digitally connect all the prison formations to the office of the Attorney General of the Federation, the police, prison service and, indeed, selected courts.
“The essence is to have an idea on a daily basis of what obtains at our prisons across the nation.
“So, at a glance at a click of the button, one can access what obtains at the prisons across the country.
“For instance, who is going to court today, who is being released today, those who have been in prison longer than their years of sentence, who is in prison that is not meant to be there.
“This will aid stakeholders in decision-making on a daily basis through digital process of inter-networking. This is against an ad-hoc committee moving across the country to have physical presence in prisons.”
He said contract for the initiative has been awarded at the cost of N2.8 billion.
On his part, the Minister of the Federal Capital Territory (FCT), Mohammed Bello, said the FEC approved the award of contract for the supply of water and field for the Abuja Water Board at the sum of N368 million, including five per cent VAT, as well as the contract for the supply of 500 firemen suits under the FCT Fire Services for the management agency of the FCT, at the cost of N226 million, including five per cent VAT.
The Minister of State, Aviation, Hadi Sirika, also said that FEC approved N291,731,485 million for the procurement of Memory Access Retrieval System to enhance safety as, according to him, “safety and security is the main trust of President Muhammadu Buhari government in aviation.”
He said it would enhance the nation’s laboratory in accident investigation, adding: “It is a requirement of International Civil Aviation Organisation (ICAO) in its standard practices and applicable by local laws.”
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