IMF urges slowdown in borrowing for Nigeria

As Nigeria’s appetite for foreign debt grows, the International Monetary Fund, IMF says the country should be reducing its budget deficit and debt-service costs to “sustainable” levels.

“Stronger macroeconomic policies are urgently needed to rebuild confidence and foster an economic recovery,” the Washington-based lender said in a report Thursday after a team from the fund visited Nigeria whose debt service cost doubled last year to 66 percent of revenue.

“There’s a “need for a front-loaded, revenue-based fiscal consolidation starting in 2017, to reduce the federal government interest-payments-to-revenue ratio to sustainable levels.”

Nigeria had asked parliament to give its nod for a borrowing programme as large as $30bn as the West African economy hit by tumbling oil revenue and a severe shortage of foreign exchange plots its way out of a debilitating recession.

Africa’s largest economy contracted in 2016 for the first time since 1991. President Muhammadu Buhari is trying to revive growth with a record 7.3 trillion naira ($23 billion) budget this year. He wants to raise $3.5 billion abroad to plug the deficit.

The government issued a $500 million Eurobond on Wednesday as part of the 2016 budget, after raising $1 billion in February.