Until Nigeria generates enough foreign exchange and finds solution to its over bloated head cost, the country will not cease going to international credit institutions for loans.
This was the view of the Finance Minister, Mrs. Kemi Adeosun, who at a public function in Abuja disclosed that the President Muhammadu Buhari administration was passing through a challenge in settling its foreign loans and contractors, which had been piling up in the past 10 years with a dwindling revenue.
According to the Minister, “Over N15 billion is run as over head cost in Nigeria monthly with over N200 billion owed local contractors and servicing outstanding loan obligations, all of these are mounting pressures on the limited internally generated revenue.
“That further means that without foreign loans, there is no way the country can meet up all its obligations. Of course, no country is without loan so long as they are used for real development of the economy”,
The minister said if the argument is that government should not borrow but wait for the price of oil to bounce back, “the prognosis is that it’s not going to go back to $110 per barrel any time soon.”
As at date, Nigeria is expecting about $30 billion from a number of international institutions to enable it meet obligations of both 2016 and 2017 budgets, which are said to have been hampered by some negative developments, including IMF not being in a hurry to meet the request.
But a number of experts have differed with the minister on the best way out, holding that there are still openings besides going for loans, so long as government has taken proper note of calls for a lasting policy on revamping the economy.
John Odeh, a chartered accountant with JFC Consults said: “A country that has the opportunity to diversify its economy on several occasions, but fails to do so will not have it easy meeting its local and internal obligations. But the recession is yet another opportunity for Nigeria to make a difference.”
Mr. Atonde Peterside, a banker and investment expert, said the way out of the challenge so far identified is not for Nigeria to go cap in hand begging for loans at any condition to diversify its revenue base.
He said having identified over-bloated personnel cost as part of the problems facing the country, the best option is to take a corrective measure towards solving such problem and have the economy enjoy some breathing space for real growth.
But the Minister’s position, said officials of DMO, is likely to be misread by members of the public to mean that the country was going for the international loans to pay salaries and contractors.
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