FG warned to stop consulting IMF, foreign experts alone on policies
Developing countries spent a record $1.4 trillion to service their foreign debts, as their interest climbed to a 20-year high in 2023, the World Bank’s latest International Debt report has shown.
This was as the Federal Government was urged to stop consulting the International Monetary Fund (IMF), World Bank and foreign experts alone without getting inputs from Nigerian experts and economic associations.
The report also revealed that interest payments surged by nearly a third to $406 billion, squeezing the budgets of many countries in critical areas such as health, education and the environment.
It noted that the financial strain was fiercest for the poorest and most vulnerable countries – those eligible to borrow from the World Bank’s International Development Association (IDA).
Data shows that Nigeria’s indebtedness to the IDA grew by $600 million in three months, from $16.5 billion in June 2024 to $17.1 billion in September 2024.
The affected developing countries, Nigeria inclusive, paid a record $96.2 billion to service their debts in 2023.
Although repayments of principal decreased by nearly eight per cent to $61.6 billion, interest costs surged to an all-time high of $34.6 billion in 2023, four times the amount a decade ago.
For some countries, the payments run as high as 38 per cent of export earnings.
The report stressed that as credit conditions tightened, the World Bank and other multilateral institutions became the main lifeline for the poorest economies.
Since 2022, foreign private creditors have received nearly $13 billion more in debt-service payments from public sector borrowers in IDA-eligible economies than they disbursed in new financing.
Also, the bank and other multilateral institutions pumped in nearly $51 billion more in 2022 and 2023 than they collected in debt-service payments.
Reacting to the report findings, the World Bank Group’s Chief Economist and Senior Vice President, Indermit Gill, said: “Multilateral institutions have become the last lifeline for poor economies struggling to balance debt payments with spending on health, education and other key development priorities. In highly indebted poor countries, multilateral development banks are now acting as lenders of last resort, a role they were not designed to serve. That reflects a dysfunctional financing system: except for funds from the World Bank and other multilateral institutions, money is flowing out of poor economies when it should be flowing in.”
The report highlighted that in 2023, borrowing abroad became considerably more expensive for all developing economies, as interest rates on loans from official creditors doubled to more than four per cent, and rates charged by private creditors climbed by more than a point to six per cent, which is a 15-year high.
On his part, the World Bank Chief Statistician and Director of its Development Data Group, Haishan Fu, noted that comprehensive data on the liabilities of governments can facilitate new investment, reduce corruption and prevent costly debt crises.
He disclosed that the World Bank played a leading role in improving debt transparency across the world, especially in IDA-eligible economies.
PRESIDENT of Nigerian Economic Society (NES), Prof Adeola Adenikinju; President of Nigerian Association of Macro-economic Modellers (NAMM), Prof Philip Alege; and former Director-General of Nigerian Institute of Social and Economic Research (NISER), Prof Olu Ajakaiye.
emphasised that the Federal Government ought to integrate indigenous experts into policymaking, for them to peer-review the suggestions by foreign experts and institutions.
They made the call during the third hybrid NAMM international conference, with the theme, ‘Macro-economic Modelling and Data Science for Socio-Economic Development, at the University of Ibadan (UI), Oyo State.
Supported by the National Bureau of Statistics (NBS), Centre for Petroleum, Energy Economics and Law (CPEEL), Nigerian Economic Society (NES), CAPE Economic Research and Consulting, UI and others, the conference brought together diverse stakeholders, including academics, researchers, policymakers and industry professionals, to deliberate on critical macroeconomic modelling and data science issues in Nigeria.
The eggheads urged the government to deploy economic models more in policy formulation for optimum economic performance.
In his remarks, Adenikinju maintained that it was important for the government to consult Nigerian experts, not just rely on foreign institutions alone.
On his part, Ajakaiye, who is of the African Centre for Shared Development Capacity Building (ACSDCB), Ibadan, said the government needed to do more in terms of using models in decision-making and involvement of local macroeconomic modellers.
The professor also called on the government to listen to indigenous experts before receiving advice from their friends from outside.
Alege underscored the importance of models in policy formulation and decision-making.
The NAMM president said: “The major thing that economists do is to understand the workings of the system and translate them into models. A model is just a mathematical representation of your understanding of the workings of the system. Once you touch any sector, it will have a reverberation on other sectors.
“We are also showcasing what we can do so that governments can begin to test us. The government should look at our side. The foreign institutions and experts are not doing better than us. This is the economy we see every day. Governments should patronise us, encourage us and help us in capacity building.”
Other experts, including Prof OlusanyaOlubusoye (Vice President of NAMM), Prof Afees Salisu, Prof Chris Kalu, Dr Chinedu Nwosu, Dr Olaoluwa Yahaya and Dr Michael Adebiyi (former Director of Research Department, Central Bank of Nigeria) called for adequate use of models for robust decision-making.
They also charged young scholars in macro-economic modelling to be meticulous and serious about research works, adding that there are ample career opportunities in the sub-sector.
