The World Bank has called on the Nigerian government to stop borrowing to develop the country’s infrastructure and stimulate the economy.
The World Bank, through its senior economist, Gloria Joseph-Raji, said this in reaction to comment by Minister of Finance, Kemi Adeosun, that the administration needs to borrow more.
Joseph-Raji said dwindling revenues had raised a concern both at the federal government and the World Bank on the sustainability of Nigeria’s borrowings as debt-to-revenue ratio had increased by 25 percent within a period of one year.
“Nigeria has a decent debt-to-GDP ratio, currently about 19 percent. It is the debt to revenue ratio that is of concern and that rate is a sustainable issue. That is of concern to us and that is also of concern to the government.
“The government is aware that the debt is looking more unsustainable from the point of debt service to revenue ratio. The estimate we had for last year at the federal level was about 60 percent. That is coming from about 35 percent in 2015.
“That reflects the substantially lower revenues that Nigeria recorded last year. Even among the state governments; we know that a lot of state governments are servicing a lot of debts from their federation account allocation. So, there is really going to be a sustainable issue emerging.”