Many Nigerians are disturbed about the high level of debt Nigeria owes other countries of the world and some international financial institutions. The loan has kept growing.
The Debt Management Office (DMO) it seems has become comfortable with debt even though it keeps growing and has tried to clarify its point of view for all Nigerians to see.
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In a statement released on Wednesday in Abuja, the DMO said Nigeria’s indebtedness to the World Bank, which grew from 6.29 billion dollars in 2015 to 13.46 billion dollars in 2022 is a good thing.
What Is DMO Saying?
The DMO’s position is that Nigeria should stop obtaining loans from countries and commercial sources because of the interest rates and repayment plans.
According to the DMO, loans from the World Bank come from the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) are issued at concessionary repayment rates.
“IDA loans are concessional, that is, they allow low charges and are for very long tenors in some cases, exceeding 30 years.
“These are the types of loans required to fund development in countries such as Nigeria.
“By accessing IDA funding, the government is actively reducing debt service costs, since non-concessional funding are usually more expensive.
“Indeed, it will be inefficient for Nigeria to borrow from commercial sources when concessional funding sources such as ODA is available,” the DMO said.
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It said that Medium-Term Debt Management Strategy (MTDS 2020-2023) outlined effective debt management models for Nigeria.
“The MTDS actually states that we will maximise funds available to Nigeria from multilateral and bilateral sources in order to access cheaper and longer tenor funds.
“Therefore, borrowing from IDA is actually an implementation of this strategy”.
