In the face of short-term apprehensions stemming from challenging global market conditions and the escalating government debt in the wake of COVID-19, the Central Bank of Nigeria (CBN) has affirmed that the country’s debt situation remains stable.
The CBN Governor, Dr. Olayemi Cardoso made this declaration during a workshop on Medium Term Debt Strategy (MTDS) held in Abuja on Monday. The workshop was organized by the World Bank, the International Monetary Fund (IMF), and the West African Institute For Financial and Economic Management (WAIFEM).
Cardoso highlighted that Nigeria’s external debt-to-GDP ratio stands at a manageable 9%, indicating a prudent approach to external borrowing. Notably, 85% of the nation’s debt possesses medium to long-term maturities.
In terms of debt sustainability, he emphasized that Nigeria finds itself in a comparatively favorable position, boasting a debt level of 37% of GDP—lower than the average of 50% of GDP observed in emerging and developing economies.
However, while overall risk assessments remain moderate, Cardoso cautioned that attention must be paid to potential liquidity risks. This is especially true in the context of weaknesses in revenue mobilization and persistent challenges that could threaten debt sustainability and financial stability if not adequately addressed. He stated, “Like other developing and emerging economies, Nigeria’s experience with the MTDS is a significant aspect of its broader medium-term economic management and fiscal policy framework.”
The reassurance from the CBN comes at a time when global economic uncertainties and mounting debt levels have raised concerns. Financial observers in the country say the central bank’s emphasis on cautious borrowing and attention to potential challenges underscores its commitment to maintaining a stable financial environment for the country.
