Juliana Taiwo-Obalonye, Washington DC
Minister of Finance Kemi Adeosun on Friday stated that Nigeria, with less than 20 per cent debt to GDP ratio, could not be categorized a low income country by the International Monetary Fund (IMF).
The IMF Financial Counselor and Director of the Monetary and Capital Markets Department, Tobias Adrian, had on Thursday said rising public debts in emerging economies could constitute direct risk to financial stability.
Adrain, who gave the warning during the Global Financial Stability report presentation at the ongoing IMF/World Bank Spring meetings in Washington, said that “Rising foreign debts remain a big risk to financial stability. The debts that are accumulated quickly are deteriorating and could pose financial stability crisis in the future in emerging markets.”
But Adeosun, who spoke with journalists at the end of the G-24 Finance Ministers and Central Bank Governors’ Meeting at the IMF Headquarters, said the legitimate concerns were for countries whose debt levels were very high at 55% of GDP.
Responding to the concerns raised about the debt levels in low income countries said, “The concerns, which have been expressed, are about debt levels in low income countries (LIC). Nigeria is actually a mid-income country. The concerns that have been expressed are a legitimate one. They are about countries which debt levels are at 55% GDP.
“Nigeria is at less than 20%, so we are not actually one of the countries they are expressing concerns about. However, we will continue to manage our debts very responsibly. We are at 20% and we don’t intend to grow it aggressively.
“The rate of debt accumulation is slowing down as we are replacing the debts with revenue and refinancing our debts. It is a good advice, but Nigeria is not a low-income country by the classification. We are actually a mid-income country.”
The Minister assured that Nigeria’s debt level was being managed in line with the Federal Government’s revenue and debt strategy, adding that the focus was now on improving the revenue base of the country in order to invest more in infrastructure.
On the issue of human capital development, the minister explained that this was a huge priority for Nigeria with a population at over 190 million.
According to her:
“It is a huge priority for a country with a huge population like ours. What we need to do is to be more focused on the data so that we really understand how much we are investing.
“It is not really about the amount you are investing, it is about the outcomes. If we continue to measure education by how much we spend, we will always get the wrong result. It is not how much we spend in schools, it is about what they learn.
“So, we need quality-based approach to invest in human capital; but the short term objective is to really plug this infrastructure gap. It must be plugged quickly so that we can industrialize and create jobs.
“It is those jobs and those businesses that will contribute in the payment of taxes and therefore enable the Government to reinvest more in human capital. This is really important for our development,” she said.
On what Nigeria was bringing to the table at the G-24 Finance Ministers and Central Bank Governors’ Meeting, Adeosun stated that the countries shared experiences and ideas on good governance and improved economic outlook.
“We spoke extensively about debts sustainability, revenue mobilization, how we need to improve our tax collection, how we need to plug leakages, and invest in infrastructure,” the finance minister explained.