Rising global public debt, a major concern

The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, yesterday, decried rising global public debt saying borrowing remained a significant concern globally, particularly in developing nations, where high debt levels were worsened by greatly restricted fiscal space and limited opportunities for concessional finance. Represented by CBN Director, Monetary Policy Department, Dr. Mohammed Musa Tumala, at the World Bank/IMF/WAIFEM regional training on Medium-term Debt Strategy (MTDS) that was jointly organized by the parties–the apex bank boss pointed out that slow economic growth, elevated borrowing costs, constrained liquidity, and eroded reserves had frequently aggravated the precarious economic situation. Adding that the external debt-to-GDP ratio had been manageable at nine percent, indicating cautious external borrowing. He explained that the developments also hindered government and private sector efforts to tackle economic downturns or fund initiatives that stimulate growth, which were essential for stabilizing the debt-to-GDP ratio and achieving long-term debt sustainability. He, however, conveyed in his message that Nigeria was at “moderate” overall risk of sovereign stress – that the country’s sovereign profile remained stable despite near-term risks attributed to unfavourable global market conditions and increased debt burden since the COVID-19 pandemic. But, Director-General of the West African Institute for Financial and Economic Management (WAIFEM), Dr Baba Musa, who also spoke at the program warned that Nigeria was at a high risk of debt distress given its current revenue challenges related to borrowing.