Federal Gov’t Borrowing Must Be Strategic, Beneficial To Nigerians – Rewane

Famend economist and Managing Director of Monetary Derivatives Firm Restricted, Bismarck Rewane, has suggested the Federal Authorities to undertake a extra strategic method to borrowing, stressing that loans have to be tied to productive ventures that profit the Nigerian folks.

Rewane spoke on Thursday on Channels Tv’s ‘Enterprise Morning’ present, monitored by our correspondent. He emphasised the necessity for the Tinubu administration to give attention to revenue-generating initiatives that ship actual dividends of democracy.

“We have to be very intentional, very strategic and give attention to what we’re borrowing for, to generate income and to have an effect in order that the folks can start to reap the dividends of reforms and democracy,” he mentioned.

In line with the Debt Administration Workplace (DMO), Nigeria’s exterior debt stood at $45 billion as of December 31, 2024. In simply 16 months, the Tinubu administration has reportedly borrowed $6.45 billion from the World Financial institution, elevating considerations amongst analysts concerning the long-term sustainability of the nation’s debt profile.

Rewane famous that whereas Nigeria requires international alternate inflows, these ought to ideally come by voluntary investments reasonably than extreme borrowing, until such borrowings are finished strategically.

“Nigeria wants some {dollars} and people {dollars} are both going to come back in from investments which are coming in voluntarily or from borrowings which are finished strategically,” he defined.

He additional warned that expectations of a drop in world rates of interest, which might have eased Nigeria’s debt servicing burden, at the moment are being delayed, probably forcing the nation to boost funds at the next value.

“If we have been anticipating to borrow as a result of we thought rates of interest have been going to come back down and the debt service burden wouldn’t be as laborious as initially anticipated… Now, the drop in rate of interest goes to be delayed somewhat bit longer towards the tip of the yr or subsequent yr, which implies that Nigeria must increase cash at the next price than anticipated,” he mentioned.

Rewane careworn the necessity for prudent fiscal administration: “If that be the case, we now have to be extra environment friendly in the best way we use our cash. What are we borrowing for? Are these budgets going to generate sufficient income to service these money owed? These are the important thing parts.”

With over 740 days already spent in workplace, the economist reminded the Tinubu administration that point is operating out to reveal the influence of its financial reforms.

On financial coverage, Rewane additionally weighed in on the Central Financial institution of Nigeria’s (CBN) benchmark rate of interest, at present pegged at 27.50%, saying a downward evaluate is crucial to stimulate funding.

“Whereas the mandate of the central financial institution isn’t growth-driving but in addition about worth stability, the central financial institution would focus extra on inflation however on the identical time would give an impetus to the fiscal authority to say we now have introduced down rates of interest to encourage folks to speculate,” he mentioned.

Nonetheless, he careworn that fiscal authorities should additionally play their half in eliminating structural challenges that hinder productiveness.

“The federal government additionally has a duty to take away the bottlenecks to productiveness,” he added.

Rewane’s feedback come amid ongoing debates about Nigeria’s debt sustainability and the effectiveness of the present administration’s financial insurance policies. As borrowing continues, many consultants have been calling for higher transparency and impact-driven fiscal planning.