The monetary policy committee of
the Central Bank of Nigeria (CBN) has warned that the federal government’s debt
levels could be fast approaching the pre-2005 levels.
Reading the communique of the
committee’s decision at the end of its bi-monthly meeting on Tuesday, Godwin
Emefiele, the CBN governor, said: “On external borrowing, the committee noted
the increase in debt level advising for caution, noting that it could fast be
approaching the pre-2005 Paris Club level.”
On October 20, 2005, Nigeria
reached an $18 billion debt relief agreement with Paris Club. Nigeria was
required to pay $12.4 billion of its $30 billion debt stock in three tranches.
Ngozi Okonjo-Iweala, who was the
minister of finance at that time, led the Nigerian delegation while Xavier Muscat,
chairman of the Paris Club, led the 15-member club to sign the agreement.
The deal saw Nigeria exit the
club completely after the final payment was made on April 21, 2006.
According to data released by the
Debt Management Office, Nigeria’s external debt stood at $21.6 billion as at
September 30.
Speaking on the federal
government’s plan to raise more revenue through value-added tax, Emefiele said
the committee was of the view that it would help reduce pressure on government
expenditure.
“The committee also noted the
attempts by the government to broaden the base of the Value Added Tax and urge
the authorities to expedite action in that effect, arguing that increased tax
collection will reduce pressure on government expenditure and create fiscal
buffers to improve macroeconomic management,” he said.
The monetary policy rate was
retained at 14% while the Cash Reserves Ratio was maintained at 22.5%.
Liquidity ratio was left at 30%
and the Asymmetric Window was left at +200 and -500 basis points around the
MPR.
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