Many African governments are currently caught in the crisis of refining domestic debts at cut-throat costs even as they overstretch the funding capacity of their central banks to bridge the gaping hole in their finances, a situation that has left many in dire straits, a report by S&P warned yesterday.
The S&P report coincided with the second to the last meeting of the rate-fixing arm of the Federal Reserve, which ended yesterday with the prevailing interest rate left unchanged. Ahead of the presentation of the 2024 budget, the Federal Government may be sourcing at least N8.7 trillion to partly fund the estimated N9 trillion deficit. It hopes to raise N206 billion from privatisation proceeds – an endless, wild goose chase that yielded no substance during the administration of Muhammadu Buhari.
Whereas many leading economists and financial experts, including Dr Aye Teriba, bucked at the sincerity of the process, the Director General of the Debt Management Office , Patience Oniha, in an email exchange with The Guardian, said the debt restructuring was indeed completed with the DMO taking the debt off the CBN through bond issuance.
Though Nigeria is not among hard-hit countries – Egypt, Zambia, Mozambique and Ghana – in terms of domestic debt refinancing crisis, according to S&P Global Ratings’ Domestic Debt Index , the country certainly faces a tough debt challenge with its debt-to-revenue ratio well above 100 per cent. The international monetary scene is still fraught with challenges. For instance, the Fed left the door open for further interest hikes yesterday on account of strong growth and still higher than expected inflation rate. A further tightening means the market would continue to de-risk, with attendant implications for the emerging and frontier markets.
At the onset of the current liquidity tightening last year, The Guardian reported that the country could be excluded from the global financial system, which would force it to rely on the local debt market. Since then, reliance on CBN overdrafts and other local windows has increased, starving the private sector of needed capital to expand and create jobs.“Real rates on domestic debt remain deeply negative in Egypt, Ethiopia and Nigeria.
Following President Bola Tinubu’s recent vote of confidence in his Chief of Staff, Femi Gbajabiamila, South East/South South Heritage Foundation has saluted the President for standing by the CoS and attesting to his sterling qualities. President of the socio-political group, Chief Kenneth Uzoigwe, described as heartwarming Tinubu rising to the occasion to defend Gbajabiamila. “We…
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