Economy
FG Should Be Careful On Ability To Pay Back Loans – Cardoso
The Central Bank of Nigeria has warned Nigeria and other West African nations regarding trends in borrowing practices.
Traditionally, nations often relied on loans from the Paris Club, a group of creditor countries.
However, the CBN said it has observed a significant shift towards borrowing from non-Paris Club members and private lenders, such as banks and investors who buy government bonds.
The West African Institute for Financial and Economic Management has warned that Nigeria is at a high risk of falling into debt distress and urged the federal government to look for ways of improving revenue generation.
Governor of the CBN, Yemi Cardoso, gave the warning in Abuja at the Joint World Bank/IMF/WAIFEM Regional Training on Medium Term Debt Management Strategy in Abuja on Monday.
Represented by Dr Mohammed Musa Tumala, Director of the Monetary Policy Department of the CBN, Cardoso noted that while this change in who countries owe money to might seem like a minor detail, he emphasised that it is a critical development with serious implications.
He argued that the way countries manage debt owed to the Paris Club may not be as effective for these new lenders. Cardoso expressed concern that this new debt landscape could pose a threat to financial stability and economic recovery for many countries.
Cardoso said, “Public debt dynamics are increasingly influenced by significant debt servicing obligations to non-Paris Club members and private lenders, including commercial banks and bond investors.
“This shift in the debt structure represents a critical evolution in the global financial framework, with profound ramifications for public debt management in our countries.”
He also stated that recent events like the COVID-19 pandemic, geopolitical conflicts, and natural disasters have put a strain on many countries’ finances, making them more likely to seek loans from diverse sources.
However, these non-traditional lenders might come with stricter repayment terms and potentially higher risks compared to Paris Club loans.
“Following the COVID-19 pandemic, along with other developments such as geopolitical conflicts and natural disasters, the financial strain on our sub-region has escalated, posing a threat to their macroeconomic and financial stability and prospects for faster recovery,” he said.
Nigeria, despite being classified as having generally moderate debt risk, the CBN urged the federal government to remain cautious, particularly regarding potential liquidity risks. These risks, if not addressed effectively, could stem from weak revenue mobilization, a persistent challenge hindering debt sustainability and economic stability.
What the CBN is saying is that while Nigeria’s overall debt risk is considered moderate, the country still needs to be careful about its ability to pay back its loans (liquidity risk). This risk could become a problem if the government doesn’t collect enough revenue (money) in the future.
Dr Baba Yusuf Musa, Director General of the West African Institute for Financial and Economic Management told journalists, “When you compare Nigeria with the rest of the world or peer countries, you realise that with the 37 per cent debt to GDP ratio, we still have room to borrow but the issue with the Nigerian debt is you don’t use GDP to pay debts rather you use the revenue to pay for any debt”
He added, “If you look at it from the revenue side Nigeria is at a high risk of debt distress in terms of our borrowing so what we need to do now is to step up our capacity to generate revenue, the more revenue we have, the less ratio of debt to revenue we have.”
WAIFEM, he said, is “very much in support of what the federal government is doing because there is a window for the government to raise more revenue, all that the people need to do is to support the federal government diversify the sources of revenue and of course generate more sources of revenue, once we have this we don’t have debt problem but rather revenue problem.
He added, “What the Medium Term Debt Strategy does is that it smoothens the debt service so that going forward when borrowing, you take into consideration the redemption profile that you have and the type of loans that you have in your existing portfolio and then it will enable you also to minimise the cost and risk the future loans will add to the debt portfolio.”
President Donald Trump has given TikTok a 75-day extension, staving off a ban on the Chinese-owned app just as its April 5 deadline loomed.
In a Friday post on Truth Social—his social media platform- the US President trumpeted an executive order to extend negotiations, a move he cast as a lifeline for a deal he’s keen to seal.
“My Administration has been working very hard on a Deal to SAVE TIKTOK, and we have made tremendous progress,” Trump wrote.
“The deal requires more work to ensure all necessary approvals are signed, which is why I am signing an Executive Order to keep TikTok up and running for
an additional 75 days.”
The ban, initially deferred on his first day back in office in January, had been barrelling toward an April 5 cutoff—now pushed out once more.
TikTok’s parent company, ByteDance, has been under pressure to divest its US business following bipartisan legislation passed in 2024 that mandates the app’s separation from Chinese ownership.
Trump laced his announcement with a jab at China, irked, he said, by his reciprocal tariffs. “We hope to continue working in good faith with China,” he added, calling tariffs “the most powerful economic tool” and vital for national security.
“We do not want TikTok to ‘go dark,’” he insisted, eyeing a resolution that keeps the app alive.
We look forward to working with TikTok and China to close the deal. Thank you for your attention to this matter!”
The Naira depreciated to N1,600 per dollar in the Nigerian Foreign Exchange Market (NFEM) today after three months of being on the N1,500 per dollar threshold.
Data published by the Central Bank of Nigeria, CBN, showed that the indicative exchange rate for the naira rose to N1,600 per dollar from N1,569 per dollar on Thursday, indicating N31 depreciation for the naira.
Likewise, the naira depreciated to N1,565 per dollar in the parallel market from N1,555 per dollar on Thursday.
Consequently, the margin between the parallel market and NFEM rate widened to N35 per dollar from N14 per dollar on Thursday.
The Petroleum Products Retail Outlet Owners Association of Nigeria says some local refineries are importing substandard crude into Nigeria to cut costs.
Speaking with our correspondent on Thursday, PETROAN National Publicity Secretary Joseph Obele said the refineries have been importing crude oil with high sulphur content into Nigeria.
Asked to mention some of the refineries, Obele declined, saying the concerned refineries know themselves, hoping they will adjust.
According to him, the importation of low-quality crude oil into Nigeria started following the suspension of the naira-for-crude deal by the Federal Government.
He said, “Some refineries are importing substandard crude into the country. They do this to cut costs following the stoppage of the naira-for-crude deal. We are not going to mention any particular refinery, but when those concerned see the report, they will make corrections.
“Many may not know there is substandard crude. Any crude oil with high sulphur content does not meet the global standard.”
Earlier in a statement, PETROAN cautioned refinery operators to prioritise the importation of high-quality crude oil as the naira-for-crude tenure ends.
“We urge the refinery operators to ensure that the crude oil imported meets global standards to guarantee the production of high-quality petroleum products,” Obele noted.
He explained that Nigerian Sweet Crude is among the best in the world, saying imported crude should not be lower in quality.
“It is noteworthy that Nigerian crude oil, classified as sweet crude (with less than 0.5 per cent sulphur content), is among the best in the world, and we see no reason why imported crude oil should be of lower standards.
“The association is concerned that the importation of substandard crude oil will compromise the quality of petroleum products, undermine the growth and development of the Nigerian oil and gas industry, and ultimately harm Nigerian consumers,” he argued.
He called on the Federal Government and the regulatory agencies to be on high alert and “conduct thorough laboratory analysis on all crude oil imports to ensure they meet the required standards.
“We also urge the relevant authorities to ensure that refinery operators adhere to the highest standards in their operations, including the importation of high-quality crude oil,” he said.
PETROAN also called on the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, to conduct an appraisal of the first phase of the naira-for-crude initiative to ascertain the next line of action in the best interest of Nigerians.
Furthermore, he stressed that the permutation that the price of petroleum products will keep increasing as the naira-for-crude deal comes to an end is a serious concern to PETROAN.
“In order to avoid this scenario and ensure price stability and energy sufficiency, PETROAN advocates that the window for importation of refined petroleum products should remain open.
“Meanwhile, PETROAN is optimistic that the recent increment in the price of PMS is temporary. The reforms occasioned by the Petroleum Industry Act encourage competition in the downstream sector. Competition is a catalyst for price reduction in any sector. We believe that as the market adjusts to the new realities, prices will stabilise and eventually decrease.
“To further protect the interests of our members and the Nigerian consumers, PETROAN will be vigilant and proactive. We will conduct laboratory testing on refined petroleum products to determine which refinery or depot to mobilise our members to purchase from. This is to ensure that our members and the Nigerian public are not sold substandard products,” Obele threatened, even as he refused to mention the refineries importing substandard crude.
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