Zainab Ahmed, minister of finance, budget and national
planning, says the federal government is considering tapping into the newly
created fund by the International Monetary Fund (IMF).
Ahmed said this on the sidelines at the ongoing IMF- World
Bank meetings on Wednesday in Washington.
The finance minister also said the federal government has
been engaging financial institutions to look into the country’s portfolio debt
to restructure and further stretch the debt service period to give more fiscal
relief.
“It is a fact that Nigeria’s debt has increased over the
last three to four years, and this increase in debt was occasioned by the
different kind of exogenous shocks that the country faced, which is not unique
to Nigeria,” she said.
“The last drawing we had from the IMF is the second round of
special drawing rights (SDRs) that was provided for all the member countries.
The IMF recently offered a food security package that countries can draw, and
it is equivalent to about 50 percent of their SDRs.
“We have not taken a decision to draw on that. We have to
examine the requirements, terms and conditions, to see if it will be safe for
us to draw because we don’t want to be drawn into an IMF programme.
“If they work for us, we will now decide to take it because
the funds can certainly be useful in terms of adding to our reserves and coping
with the challenges the country is facing.”
She said there are signs that the recent flooding in the
country would cause more stress to the food system, affecting harvest and
prices.
“The floods that have been happening are going to cause more
stress on our food system. We realise that the floods are currently destroying
crops and therefore the harvest that is expected will be much less, and it will
mean that more of our people will struggle to afford food,” she added.
On debt restructuring, Ahmed said the federal government
plans to use up to 65 percent of government revenues next year to service debt.
She said the government would also scale back on some tax
incentives and expand the tax net to ramp up domestic revenue.
“Unfortunately, the cost of debt service is rising because
of the rising interest rate globally, resulting in higher debt service costs.
Our projection from the debt sustainability analysis is that Nigeria is able to
cope with its debt service,” the minister said.
“We have been engaging financial institutions to look at the
opportunity to restructure our debt to further stretch the debt service period
to give us more fiscal relief. Those are some of the things we want to achieve
in this meeting.”
“Also, what we are doing is to ramp up domestic revenue
mobilisation. There are so many different aspects that we are looking at,
including cutting down on tax expenditure taxes, furniture, waivers, incentives
that are being provided to encourage businesses.”
Earlier, Pierre-Olivier Gourinchas, IMF’s director of
research department, advised low-income countries to progress toward debt
restructuring to avert sovereign debt crises.
Gourinchas said many low-income countries are close to or
are already in debt distress and should urgently consider improving their
liquidity buffers, including by requesting access to precautionary instruments
from the Fund.
“Countries should
also aim to minimise the impact of future financial turmoil through a
combination of preemptive macroprudential and capital flow measures, where
appropriate, in line with IMF’s Integrated Policy Framework,” he said.
“There are clouds on the horizon, but progress on climate policies, debt resolution, and other targeted global issues will demonstrate that strengthened cooperation can achieve progress for all and help to overcome geoeconomic fragmentation.”
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