Amid politicking, Nigeria is fast sliding back into astronomical debt
While the noise of election and campaign keep on rising, Nigeria is quietly drifting back into astronomical debt that is close to the amount of debt the country owed before the Paris Club in 2005.
Nigeria was owing the Paris Club a huge sum of $30billion as at 2005 until Ngozi Okonjo-Iweala the Minister of Finance at that time led a delegation that negotiated for a relief of $18billion which meant that Nigeria only paid about $12billion.
After that settlement in 2006, Nigeria exited the Paris Club, but the debts started growing again from then.
As it stands right now, the Central Bank of Nigeria, CBN has raised an alarm that Nigeria is fast approaching a debt crisis as the country’s debt profile eclipse to $21.6billion.
CBN governor, Godwin Emefiele says that if something is not done about the rising debt rate, the burden will create some infractions in the nation’s economy.
Concerning the government’s plan on generating more revenue from value-added tax, Mr Emefiele sees the decision as a good step in the right direction.
“The committee also noted the attempts by the government to broaden the base of the Value Added Tax and urge the authorities to expedite action in that effect, arguing that increased tax collection will reduce pressure on government expenditure and create fiscal buffers to improve macroeconomic management,” he said.
If substantive action is not taken to solve the rising debt rate, like reducing excessive external borrowing, the impact of this debt might cause an economic concession that will slow down the growth of the country.
