•Bismarck Rewane and food stuffs
The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, says the President Bola Tinubu administration must be strategic with its borrowings in a way that benefits Nigerians.
“We need to be very intentional, very strategic and focus on what we are borrowing for to generate revenue and to have an impact so that the people can begin to reap the dividends of reforms and democracy,” the economist said on Channels Television today.
According to the Debt Management Office, Nigeria’s external debt stock as of December 31, 2024, stood at $45bn. As of 2024, the Tinubu administration borrowed $6.45bn from the World Bank in just 16 months, according to official documents.
Rewane warned the government that borrowings must be strategic.
He said, “Nigeria needs some dollars and those dollars are either going to come in from investments that are coming in voluntarily or from borrowings that are done strategically.
“If we were anticipating to borrow because we thought interest rates were going to come down and the debt service burden would not be as hard as originally as expected.
“Now, the drop in interest rate is going to be delayed a little bit longer toward the end of the year or next year which means that Nigeria would have to raise money at a higher rate than anticipated.
“If that be the case, we have to be more efficient in the way we use our money. What are we borrowing for? Are those budgets going to generate enough revenue to service those debts?
“Those are the key elements and it is important because we have done about 740 days since the administration came into power and time is running out.”
The economist also said the Central Bank of Nigeria (CBN) should drive down the interest rate which stands at 27.50% to encourage investments, adding that the government also has a responsibility to remove the bottlenecks to productivity.
“While the mandate of the central bank is not growth driving but also about price stability, the central bank would focus more on inflation but at the same time would give an impetus to the fiscal authority to say we have brought down interest rates to encourage people to invest but the fiscal authority must do a lot of things about the bottlenecks of productivity,” he said.
