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Nigeria’s debt increasing at a very high rate, World Bank warns

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World Bank projects 2.6% growth for Nigeria in 2017

The World Bank has expressed concern over the alarming rate at which Nigeria and other African countries’ debts are rising.

In its ‘Africa’s Pulse’, a biannual analysis of African economies, released in Washington on Wednesday, World Bank chiefs acknowledged that the continent had been showing positive growth. They however cautioned that African countries’ debt was increasing at a very high rate.

Those who gave this warning were the bank’s Chief Economist Africa, Albert Zeufack; Lead Economist, Africa, Punam Chuhan-Pole; and Research Manager, Michael Toman.

Speaking to journalists across African countries via a video conference, the World Bank chiefs said that the rising debt is led by some oil exporting nations, which have seen more than 50 per cent rise in debts recently.

According to Zeufack, the problem of Africa’s debt was not concessional loans secured from the World Bank, but commercial loans that countries in the region had gone ahead to secure. He added that such commercial loans come with exchange rate risks, global financial condition risks and commodity price risks.

On Nigeria in particular, Chuhan-Pole said, although the country’s debt remained low going by the debt to Gross Domestic Product ratio, interest payment had been high.

She said, “Interest payment as a share of government revenue is quite high. It raises issue of sustainability.”

READ ALSO: World Bank says Nigeria’s economy will grow poorer than earlier projected

On African countries in general she said, “The rate at which countries are accumulating debts is very high. Our countries need to pay attention to the rate at which debts are rising.”

The World Bank is projecting Sub-Saharan Africa’s growth to reach 3.1 per cent in 2018, and to average 3.6 per cent in 2019 to 2020.

The growth forecasts are hinged on expectations that oil and metals prices will remain stable and that governments in the region will implement reforms to address macroeconomic imbalances and boost investment.

“Growth has rebounded in Sub-Saharan Africa, but not fast enough. We are still far from pre-crisis growth levels. African governments must speed up and deepen macroeconomic and structural reforms to achieve high and sustained levels of growth,” Zeufack said.

 

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