CARDOSO DECRIES RISING GLOBAL PUBLIC DEBT, SAYS NIGERIA'S SOVEREIGN OBLIGATIONS STABLE
despite near-term risks attributed to unfavourable global market conditions and increased debt burden since the COVID-19 pandemic.
Equally, yesterday, CBN adjusted the foreign exchange (FX) rate on Customs import duties to N1, 544.081 to a dollar, from N1, 630.159 to a dollar, representing a 5.3 per cent reduction.
However, Director-General of West African Institute for Financial and Economic Management (WAIFEM), Dr. Baba Musa, warned that Nigeria was at a high risk of debt distress given its current revenue challenges related to borrowing.
Cardoso and Musa spoke at the opening of the World Bank/ IMF/WAIFEM regional training on Medium-term Debt Strategy (MTDS), which was jointly organised by the parties.
Speaking at the occasion, the CBN governor said the external debt-toGDP ratio had been manageable at nine per cent, indicating cautious external borrowing.
Represented by CBN Director, Monetary Policy Department, Dr. Mohammed Musa Tumala, the apex bank boss pointed out that slow economic growth, elevated borrowing costs, constrained liquidity, and eroded reserves had frequently aggravated the precarious economic situation.
He explained that the developments also hindered government and private sector efforts to tackle economic downturns or fund initiatives that stimulate growth, which were essential for stabilising the debt-to-GDP ratio and achieving long-term debt sustainability.
Cardoso said public debt dynamics were increasingly influenced by significant debt servicing obligations to non-Paris Club members and private lenders, including commercial banks and bond investors. He added that this shift in the debt structure represented a critical evolution in the global financial framework, with profound ramifications for public debt management in respective countries.
The central bank governor said following the COVID-19 pandemic, along with other developments, such as geopolitical conflicts and natural disasters, the financial strain on the sub-region had escalated, posing a threat to macroeconomic and financial stability and prospects for faster recovery.
Furthermore, he stated that to diversify their financing sources, some countries broadened their presence in international capital markets by issuing sovereign bonds and interacting with diverse private lenders.
Cardoso said there was also a noticeable move towards borrowing within domestic markets by issuing bonds in local currencies.
“However, these approaches have increased vulnerabilities, evidenced by payment delays, defaults, and the necessity for debt restructuring,” he said.
Quoting the latest World Bank/ IMF data, Cardoso said of the 69 Poverty Reduction and Growth Trust (PRGT) eligible countries, 13 remained in debt distress, with an additional 26 at high risk of debt distress. He added that these developments underlined a critical juncture in public debt management and the urgent need for comprehensive strategies to stop further progression into debt crises.
But Cardoso believed the MTDS was a significant aspect of the broader medium-term economic management and fiscal policy framework for Nigeria.
He said the primary goals of the strategy were to ensure that borrowing activities were conducted within sustainable levels, optimise the debt portfolio for cost and risk, and improve debt management capabilities.
According to him, the strategy aims to diversify funding sources through domestic and international borrowings, including issuing sovereign bonds and focuses on extending debt maturities from 10 to 30 years in domestic and international markets to lower refinancing risks and pressure on domestic markets.
He said the strategy remained the