We are not particularly fans of Bretton Woods institutions, namely International Monetary Fund (IMF) and the World Bank; if you are like us, a skeptic and take with a pinch of salt whatever they dish out strongly believing that they do not genuinely represent the interest of developing countries most of the time then you would understand when we say we do not trust them.
But this is not to say that the World Bank and the IMF do not have their moments when they make a lot of sense. Even at the point when they are making sense you still need to approach them with caution, with a long pole, making sure you fully understand them before you jump into bed with them.
Just last month, Tobias Adrian, the Fund’s Financial Counsellor and Director of Monetary and Capital Markets Department, raised the alarm in Washington, D.C., United States, at the IMF/World Bank Spring Meetings, that Nigeria’s $70.99 billion debt stock (domestic and external) posed financial stability risk to the country. For such a calibre of person at the IMF to make a statement sent tongues wag- ging, with different questions popping up in the air. What were the folks at the IMF seeing that we are not seeing, giving that back home the managers of our economy have been telling us that we are fine, our debt profile is comfortable; we can handle it.
The irony of it all, the reason why we like to be circumspect about the Bretton Woods institutions, is that in the same speech, where the IMF Financial Counsellor was trying to warn Nigeria, he also made a pitch offering their services.
He said: “The Fund was ready to provide sound debt management assistance to Nigeria and other emerging market countries,” what someone might interpret to mean a job pitch.
The one thing you can say about the current managers of our economy and political governance architecture though is that they never pass an opportunity to respond to anyone who makes a com- ment that is perceived to be a criticism of their work; they are always ready to exercise their “Right of Reply” allowance. So, from the same Washington D.C. in the United States, Finance Minister Kemi Adeosun fired back.
She responded by saying that Nigeria’s debt level was sustainable and under control and that it was below 20 percent to GDP ratio. And that we are not a low income country; all well and good.
One can choose to leave it at that, feeling reassured that all is well, and will continue to be well. But we know that all is not well. Nigeria has been borrowing an awful lot and while we might be comfortable going by the assurances of the minister, we think that the rate at which the country has been piling up debt, it’s as if the government is working very hard to return the country back to the days when Nigeria suffered from acute debt overhang before the Obasanjo government got the country debt relief.
We make the point that we are not against accumulating debt, but we are concerned about the piling up of debt for future generations and how this will impact on their lives.
We are of the view that those responsible for accumulating debt must find a way to ensure that they are part of the system that works to clear the debt. If they know they are not going to be part of the system that would clear the debt, then they owe citizens a duty to ensure that the debt that they accumulate today are productive debt with built in capacity for repayment.
For far too long, debts have been accumulated by careless people who thought of themselves for the moment and not of the impact their actions would have on today’s children who would become adults tomorrow; and those yet unborn. We have observed that the minders of this government do not like to keep quiet and get on with the job at hand. They have a penchant to respond to just about any and every comment directed at the government, especially what they perceive as a criticism. We believe that it is the stuff that lives in politics throws at you.
So, now that the Finance Minister is officially a card carrying member of the ruling party, it means she’s going to be on the politi- cal soap-box working hard to deliver her ward at least to her party. While she’s at it, could she watch over those debt numbers and give us more assurances that we are not in trouble, the way we are accumulating the debt.
As the chief financial officer of the country, the minister might also want to consider, before the political landscape gets consumed totally by politics, letting us know which of the debts are self financing and are sustainable. In other words, for transparency sakes, it would she consider it a great idea to have a profiling of all our debts as they cur- rently stand, and how they have been deployed.