NESG suggests integrated debt, expenditure strategies for sustainability

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On Thursday, the Debt Management Roundtable (DMR) presented its full report on debt management and sustainability in ECOWAS to Nigeria’s Debt Management Office (DMO) for adoption and implementation.

At a presentation held at the National Debt Management Office in Abuja, stakeholders from Nigeria’s public and private sectors, including Dr. Abel Essien of the ECOWAS Commission, Paul Adeyeye of OSIWA, and Zainab Mangga of the International Monetary Fund (IMF) Country Office, were present.

The DMR was established in March 2021 with the goal of providing viable alternatives and recommendations that the government can use to ensure that the public debt is managed sustainably.

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The initiative was rushed because of growing concerns about major countries’ debt profiles, including Nigeria’s, and the potential for spillover effects to other ECOWAS economies if left unchecked.

“The timing of the launch of the report could not have been more appropriate with global debt levels already rising pre-COVID-19 and still growing since the COVID-19 pandemic started in the year 2020,” said Patience Oniha, Director-General, DMO.

“As expected, concerns about debt sustainability have grown.

“According to the World Bank’s World Economic Outlook, global sovereign debt increased from 49.1% of GDP in 2014 to 57.9% in 2019, while sub-Saharan African sovereign debt increased from 35.1 percent of GDP in 2014 to 55.4 percent in 2019.”

“The figures for 2021 were 66.7 percent and 60.3 percent, respectively. The trend appears to be continuing, as the economic consequences of COVID-19 may linger for longer, compounded by increased economic pressures in the form of rising inflation due to higher food and energy prices resulting from the Russia-Ukraine war.

“The average Debt to GDP Ratio in West Africa is expected to rise to 67.2 percent in 2022 from 56.4 percent in 2019, according to the IMF’s World Economic Outlook for April 2022.”

NESG Chief Executive Officer ‘Laoye Jaiyeola, in a statement, emphasised the report’s depth of research and sub-regional collaboration, as well as its significance for sustainable debt management across the region if implemented.

“Our mission at the NESG is an open, inclusive, sustainable, and globally competitive economy,” he said.

“We advocate for sustainable debt management because unsustainable public debt accumulation is harmful to economic growth, not only in Nigeria but throughout the ECOWAS region.”

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‘Considering that Nigeria accounts for 50% of the region’s total debt and 67 percent of its GDP, Nigeria is a focal point for debt sustainability.

“This necessitates the adoption of more long-term strategies to create the fiscal space required for national development, with positive spillover effects in other ECOWAS countries.”

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