‘Global action on debt-ridden countries crucial’
Speakers at the ongoing virtual annual meetings of the International monetary fund (IMF) and the World Bank have called for decisive actions to arrest the growing debt crises by low and developing income countries.
Speaking on the theme: “diffusing debt and creating comprehensive solutions,” the Director General of the West African Institute for Financial and Economic Management (WAIFEM), Professor Baba Yusuf Musa, said debt management matters right now because developing and emerging economies are facing new financial vulnerabilities and increased risk of debt distress because of the COVID-19 pandemic which has triggered health, social and economic crises.
Statistics by the IMF and the World Bank suggests that more and more countries are falling into precarious debt made worse by the ongoing pandemic.
Nigeria’s economic growth is choking under the huge burden of debt servicing. As at the end of the first quarter of this year, total public debt had risen to N28.63 trillion.
An analysis by Daily Trust suggests that it would take the country at least three years of its current yearly budget size of N10trn to offset the debt burden, without payment of salaries and undertaking projects of any sort.
According to figures obtained from the Federation and the Ministry of Finance, in the 2020 spending plan, the sum of N3.52trn was released for implementation at the end of May 2020. Of the amount, the sum of N1.25trn was for debt servicing; N1.32trn for personnel, while a paltry N253.33 billion only was released for capital projects’ implementation.
Musa said: “To avoid
crises and minimize the negative effect of the pandemic shock, it is necessary that multilateral institutions and regional development banks convert the loans provided to grants and persuade the private sector to do the same.”
President of the World Bank, David Malpass said, “We are in a critical circle with debt distress more and more important for a number of countries.
“I am worried about a debt distress situation that would go on for a long time. We need to find ways to avoid that.”
The Executive Director of Jubilee USA Network, Eric Le Compte in his contribution said debt matters because too many countries were ill prepared to face the economic and health challenge brought by COVIS-19.
He said low and middle income developing countries are seeing worrisome increases in extreme poverty rate.