Regulators, economists warn on N2.2trn hidden FG liabilities, 12% non-performing loans

SOME senior members of staff of Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and frontline economists have cautioned against certain tendencies that could worsen current economic realities in the country.

Some of these include the recent discovery of additional N2.2 trillion debts hitherto not calculated along with the over N11 trillion overall national debts calculated by Debt Management Office (DMO) and increasing non-performing loans in banks, which stood at 11.7 per cent in June 2016.

Again, because of lowering international confidence in the economy, the experts contended that Federal Government may soon be forced to approach International Monetary Fund (IMF) to seek loans.

Former Special Assistant to CBN Governor, Dr Godwin Owoh, economist and lawyer said at a forum in Kaduna that by definition, current situation in Nigeria has since gone past recession into depression because, in reality, the economy stopped growing since around end of 2013.

He then warned that bank regulators should be more vigilant because of the worrying rate of increase in percentage of non-performing loans in banks.

According to him, regulatory limit for non-performing loans in Nigeria is five per cent but that by end of first half of this year; it had worsened to 11.7 per cent.

He equally noted deteriorating situation of the capital market where capitalisation declined to N8.883 trillion as against over N12 trillion in 2008, even in spite of naira depreciation.

On plans by government to invest heavily in solid minerals exploration as a way of generating more income to cushion effects of dwindling oil and gas resources, Owoh said it would be like chasing shadows and waste of available resources.

He observed that it would take a minimum of 10 years for investments in solid minerals to begin to yield expected results.

This, he said, would be compounded by the fact that artisanal miners have taken over the industry with Asian businessmen taking advantage by buying cheaply in naira and exporting to earn foreign currencies.

Also speaking, former Presidential Adviser and member of National Economic Team, Dr Biodun Adedipe, recommended fiscal, monetary and commercial policy harmonisation.

He advised CBN and fiscal authorities to discountenance riding inflation and pump money into the economy massively “to drive inclusive growth and be ready to live (for the time being) with the inflationary implications.

“First thought in a recession is to refrain from spending. Manufacturers, wholesalers and retailers suffer massive decline in sales and profit either shrinks or disappears, and then stocks pile up.

“Consumers are apprehensive about job losses and withhold funds, they don’t spend and neither do they want to borrow.

“The above conditions also adversely impact government revenue.

“This is why the typical recipe to kick-start recovery is for government to provide leadership through ‘abnormal’ fiscal stimulus.”

In addition, government should introduce stimulus across all policy planks, focused on Made-In-Nigeria’ in production, consumption and trade activities.

Giving an insight into the economy in 2017, Adedipe projected crude oil price to be at $55/bbl in 2017 while inflation would rise to 22.4 per cent until September.

Director, Special Insured Institutions Department (SIID), NDIC, Mr James Etopidiok disclosed that there is a rising in non-performing loans of primary mortgage banks and microfinance banks respectively above the threshold of 30 per cent and five per cent respectively, while their capital adequacy ratio was also declining.