There is no disputing the fact that Nigeria’s debt crisis has risen the most under President Buhari’s administration when compared to previous governments since 1999.
As of June 2021, Nigeria’s debt stock tripled to N35 trillion and further rose to N39.5 trillion as of December 2021. In the first quarter of 2022, debt continued to rise exponentially as Nigeria’s total debt stock rose to N41.6 trillion in the first quarter of 2022, which saw a N2.05 trillion increase compared to N39.56 trillion recorded last year.
With the continuous rise in debt, Nigeria’s deplorable financial crisis means it is inching closer to opening talks with the International Monetary Fund (IMF) to pave the way for the rescheduling of the country’s huge foreign debt.
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Recall that the IMF in 2018, issued a warning to Nigeria to check its rising levels of debts, also to diversify its revenue bases or face a crisis. The IMF also stated that strengthening fiscal positions was necessary to reduce debt vulnerabilities.
Fast forward to 2020, President Bihari became the first Nigerian leader to take an IMF loan due to the severity of the damage inflicted by the Covid-19 pandemic which induced a slump in crude oil prices in Nigeria’s economy. The IMF approved a loan of US $3.4 billion for Nigeria to meet the urgent balance of payment needs of the country stemming not only from the crash in crude oil prices but also from the outbreak of the Covid-19 pandemic.
The country’s economic crisis continues to worsen as its oil production has fallen to 1.2 million barrels per day. In March this year, Nigeria issued a $2.2 billion Eurobond to enable the NNPC to pay for the importation of petrol, which analysts disclose that the country is increasingly finding it difficult to find a foreign exchange to finance fuel imports.
According to Nigeria’s finance minister, Zainab Ahmed, she disclosed that the country is spending so much money on just debt servicing which is making it difficult to fund its massive petrol imports on the back of collapsing oil exports.
Speaking on Nigeria’s need for a loan for debt bailout, a frontline economist and member of the government’s economic advisory council, Bismarck Rewane disclosed that Nigeria seeking an IMF loan for debt bailout is a sure bet toward economic stability and growth.
In his words, “There is the old saying that the path to Paris is via London and Washington. To get debt forbearance from the Paris club, a country must first get Washington institutions to accept your plan is visible. That’s the way it is for all nations like Nigeria facing severe fiscal imbalance. The rescheduling of debt and all maturing obligations is a necessary path towards economic stability and growth for Nigeria”.
Some other analysts have stated that the government of Nigeria should currently be contemplating approaching the IMF to securitize the debt obligations that are falling due. They disclosed that the longer the government hides in denial of its debt crisis, the situation will continue to worsen for the country, also making it unbearable for the citizens.
Economic experts and past leaders have all expressed their worries concerning President Buhari’s insatiable desire for loans. They have disclosed that a country like Nigeria that does not produce anything tangible for the international market other than crude oil, should be prudent, as the country presently spends 90 percent of its revenue on debt servicing.
It is imperative that the Buhari administration looks inwardly and explores other avenues for boosting the country’s revenue, rather than resorting to endless borrowing that puts the economy in jeopardy.