{"id":31747,"date":"2019-05-07T14:24:04","date_gmt":"2019-05-07T13:24:04","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=31747"},"modified":"2019-05-07T14:24:04","modified_gmt":"2019-05-07T13:24:04","slug":"report-investors-jittery-over-cost-of-nigerias-rising-debt","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/report-investors-jittery-over-cost-of-nigerias-rising-debt\/","title":{"rendered":"Report: Investors Jittery Over Cost Of Nigeria\u2019s Rising Debt"},"content":{"rendered":"

A number of foreign investors and analysts are beginning to raise concerns about the cost of Nigeria\u2019s debt and how the proceeds of bond sales are utilised.<\/p>\n

Financial Times reports that some investors are still willing to invest in Nigeria because of the high returns.<\/p>\n

Andrew Roche, managing director of Finexem, a Paris-based financial consulting firm, told Financial Times that the government has been using borrowed funds to patch up holes in the budget rather than investing in infrastructure.<\/p>\n

\u201cThey have borrowed quite a bit, but where is the money being spent?\u201d he said.<\/p>\n

Speaking to investors at the spring meetings of International Monetary Fund and World Bank Group, Zainab Ahmed, the minister of finance(pictured), had said the country\u2019s debt is 19% of the 2018 GDP.<\/p>\n

However, the same presentation had shown that debt servicing now takes two-thirds of the revenue retained by the federal government after the federation account allocation committee (FAAC) shares revenues to the three tiers of government.<\/p>\n

\u201cThe issue is not so much that interest payments are high,\u201d Ravi Bhatia, a sovereign analyst at S&P Global Ratings, said.<\/p>\n

\u201cThe main problem is that federal revenues as a share of GDP are just very low. They are literally reliant on oil and little else.\u201d<\/p>\n

The IMF had recommended a revenue-based consolidation that will lower the ratio of interest payments to revenue and said non-oil revenue mobilisation should be the top priority.<\/p>

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Advertisement<\/div>\r\n\t\t\t\t\t\t\t<\/a>\r\n \r\n\t\t\t\t\t\t\t<\/div>\n

However, talks of an upward review in value-added tax have met resistance.<\/p>\n

\u201cThe economy is suffering, so to slap on another tax will not be very popular,\u201d Bhatia said.<\/p>\n

\u201cHence the reluctance in pushing it through. Essentially, [President Muhammadu] Buhari is not a big reformer \u2014 he\u2019s a slow-moving, cautious reformer, if at all.\u201d<\/p>\n

Charles Robertson, the chief economist at Renaissance Capital, says any emerging economy needs electricity, adult literacy and investment to develop a large manufacturing sector.<\/p>\n

\u201cThere are a host of reasons not to put FDI into Nigeria but unifying the exchange rates would help to normalise the country.\u201d<\/p>\n

He estimates that the fair value for the naira is about 440 to the dollar, and will be about 470 by the end of the year.<\/p>\n

\u201cThe danger is that eventually, you get a huge difference in valuation where you suddenly have to halve the currency in value,\u201d he says.<\/p>\n

\u201cIn the long run, it\u2019s a problem But investors are saying, \u2018is this going to go wrong in a year?\u2019 With oil at more than $60 a barrel, they feel the answer is no.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A number of foreign investors and analysts are beginning to raise concerns about the cost of Nigeria\u2019s debt and how the proceeds of bond sales are utilised.<\/p>\n","protected":false},"author":6,"featured_media":27372,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[23,1593,17,624],"tags":[5574],"coauthors":[2391],"class_list":["post-31747","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-business","category-metro","category-news","category-politics","tag-rising-debt"],"yoast_head":"\nReport: Investors Jittery Over Cost Of Nigeria\u2019s Rising Debt - National Wire<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nationalwire.com.ng\/sub\/report-investors-jittery-over-cost-of-nigerias-rising-debt\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Report: Investors Jittery Over Cost Of Nigeria\u2019s Rising Debt - 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