IMF commend FG on infrastructure drive, warns against unsustainable foreign loans

International Monetary Fund IMF has commended the federal government on its economic reforms and commitment to building infrastructure. It however warned against unsustainable external borrowing. IMF Assistant Director, Fiscal Affairs Department Mrs. Catherine Pattillo who commended the federal government’ efforts at reducing infrastructural gap on the sidelines of the launch of the fund’s Fiscal Monitor, at the ongoing World Bank/IMF Annual Meetings in Washington DC said “there is a need for urgent actions to front-load fiscal consolidation through mobilising more non-oil revenue.”

On external borrowing, IMF Financial Counsellor and Director, Monetary and Capital Markets Department,Tobias Andrian tasked Nigeria and other low income countries to be wary of external borrowing stating the dangers of reliance on foreign loans. He said this while speaking at a press briefing on the Global Financial Stability Report released at the World Bank/IMF Annual Meetings in Washington D.C. He said that greater reliance on foreign borrowing may at some point become a vulnerability to economies of low income countries.

Andrian said that portfolio inflow to emerging economies is expected to hit $300 billion in 2017, with Nigeria and other low income countries benefiting from easy financial conditions by expanding their access to international bond markets, adding that this is expected to further support growth prospects in these countries. He said: “Borrowing by governments, households and companies, not including banks, in the so-called Group of 20 exceeds $135 trillion, equivalent to about 235 per cent of their combined gross domestic product. Despite low interest rates, debt servicing burdens have risen in several economies. And while borrowing has helped the recovery, it has also created new financial risks.”