Members of the CBN’s MPC voice worries about the government’s borrowing and debt structure.

Concern has been voiced by members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) about the growing share of Eurobonds in Nigeria’s external debt.

They pointed out that Nigeria may suffer the earliest harm as a result of the federal government’s predilection for Eurobonds at high interest rates.

Asogwa Robert, a member of the Committee, stated in his personal statement in the communiqué that was just made public following the May 2022 meeting: “The mounting fiscal sector deficits with the accompanying rising debt ratios are part of the weak links in the domestic economic environment.

The growing accumulation of Eurobonds in the external debt component while minimising concessionary loans was particularly concerning about the debt structure. Nigeria may suffer consequences sooner than expected due to the government’s unexplained predilection for Eurobonds at high interest rates and the related exchange rate risk.

“Already, Nigeria is being mentioned by the IMF (International Monetary Fund) as one of the countries that may likely move into debt distress, given the staggering $100.07 billion dollars of public debt stock as at March 31, 2022.”

On his part, another member of the MPC, Mr Adenikinju Festus, in his personal statement said: “I am worried that Nigeria is not able to benefit maximally from the current upsides in the global oil market. “I am concerned about government budgetary performance. The rising share of governments in total credit to the economy by the banking system suggests crowding out effects of private sector borrowings.

“Government should divert to non-debt means of funding its activities. Government must grow its revenue base, reduce waivers to economic agents, plug leakages and wastes, and address the wasteful petrol subsidy system.”