Economist wants FG cautious of external borrowing

A Professor of  Financial Economics, Prof. Ndubisi Nwokoma, on Thursday advised the Federal Government to be careful with external borrowing.

Nwokoma, Director, Centre for Economic Policy Analysis and Research, University of Lagos, gave the advice in an interview with the News Agency of Nigeria (NAN) in Lagos.

Nwokoma was reacting to plans by the government to approach China for a $17 billion loans.

He said that Nigeria’s capacity to service its debts was being challenged.

“Ordinarily, borrowing would be relatively harmless if it is tied to projects and are efficiently managed.

“Nigeria’s borrowing history is not salutary and debt service payments, even now, have been putting significant pressure on revenue.

“Nigeria is in a debt trap and should be cautious in procuring more debts,’’ the director said.’’

According to him, when debt service payments are growing at a faster rate than revenue and more borrowing are  made, it can result in debt trap.

Nwokoma urged the government to make  the effects of previous borrowings more visible and felt so as to improve the  economy and grow output.

NAN reports  that the Minister of Finance, Budget and Planning, Mrs. Zainab Ahmed, had recently  told the Senate Committee on Local and Foreign Loans why the government approached the China-Exim Bank for a $17 billion loan.

She said the decision was because other lending institutions such as  the World Bank and the African Development Bank were not forthcoming on the matter.

She said the fund would be channelled into infrastructure development to enhance productivity of the economy.

She also said that the fund would be used to carry out heath care and education projects. (NAN)