The World Bank Group,
on Wednesday, denied that the Bank disagreed with the Minister of Finance, Mrs.
Kemi Adeosun, over the borrowings by the Nigerian Government to stimulate the
economy and finance infrastructure projects in the country.
In a mail to the Minister by the Senior Communications Officer
of the World Bank, Mr. Rachid Benmessaoud, the Bank averred that the media
misrepresented and quoted out of context the comments made by its Senior
Economist for Nigeria, Gloria Joseph-Raji, at an event in Abuja, the ministry
said in a statement on Wednesday.
Benmessaoud said, “On October 11th, during the launch of
Africa’s Pulse, the World Bank’s biannual analysis of African economies, World
Bank Senior Economist for Nigeria, Gloria Joseph-Raji, was asked by a reporter
to share her views on the Federal Government’s plan to increase external
borrowing.
“At no point did she mention that the World Bank and the Federal
Government of Nigeria (FGN) disagree on the need to rebalance the country’s
debt portfolio. Where expenditures exceed revenue, governments will need to
borrow.
“In doing so, the Federal Government is trying to rebalance its
portfolio towards more external borrowing with lower interest rates and longer
maturities.”
The World Bank Senior Economist was quoted by Benmessaoud to
have commended the Nigerian Government’s effort to rebalance its portfolio in
order to lower the cost of its borrowing, as outlined in its 2016-2019 medium
term debt management strategy released last year.
“The use of IDA concessional financing, among others, is
supportive of the FGN’s effort in this regard, with the added focus on poverty
alleviation and building shared prosperity in Nigeria.
“The latest issue of Africa’s Pulse points out that growth is
Nigeria is projected to pick up from 1.0 per cent in 2017 to 2.5 per cent in
2018 and 2.8 per cent in 2019. While Government debt in 2017 is projected to
rise, it remains low in Nigeria,” Joseph-Raji was further quoted to have
stated.
The World Bank spokesman expressed the Bank’s full commitment to
help the Nigerian Government restore macroeconomic resilience as well as
strengthen the ongoing economic recovery and achieve sustainable inclusive
growth.
The Finance Minister, Kemi Adeosun, who led the Nigerian
delegation to the 2017 Annual Meetings of the International Monetary Fund and
the World Bank Group, had in Washington on Sunday, said the Federal Government
would be prudent in the management of its foreign borrowings.
She noted that the Government adopted an expansionary fiscal
policy with an enlarged budget in order to deliver a fundamental structural
change to the economy, thereby reducing the country’s exposure to crude oil.
“Why are we borrowing? Mobilising revenue aggressively was not
advisable, nor indeed possible, in a recessed economy. But as Nigeria now
reverts to growth, our revenue strategy will be accelerated.
“This is being complimented by a medium-term debt strategy that
is focusing more on external borrowings to avoid crowding out the private
sector.
“This would also reduce the cost of debt servicing and shift the
balance of our debt portfolio from short-term to longer-term instruments. This
Government will be very prudent around debt. We won’t borrow irresponsibly,”
Adeosun explained.
The foreign borrowings, which are at lower interest rates,
according to her, will also prevent job losses.
“With Nigeria’s source of revenue dropping by nearly 85 per
cent, the country had no option but to borrow. The option before the
country was to either cut public services massively, which should have led to
massive job losses, or borrow in the short-term, until it begins to generate
sufficient revenues, she said.
“We felt that laying-off thousands of persons was not the best
way to stimulate growth. Also, when we came into office, about 27 states could
not pay salary. If we had allowed that situation to persist, we would have been
in depression by now.
“So, we took the view as a government that the best thing
to do was to stimulate growth and spend our way out of trouble, get the state
governments to pay salaries, making sure that the federal government pays
and invests in capital infrastructure,” said Adeosun.
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