“A major contributor to this increased public debt level is the unprecedented influx of private lenders flooding developing economies as they look for higher returns outside advanced economies” – Rafsanjani
By Abdallah el-Kurebe
ASHENEWS reports that the Civil Society Legislative Advocacy Centre (CISLAC) has identified the unprecedented influx of private lenders flooding developing economies and looking for higher returns outside advanced economies as a major contributor to Africa’s rising public debt profile.
This online platform further reports that the Executive Director of CISLAC, Mr. Auwal Rafsanjani, disclosed this at a press conference organised in collaboration with Christian Aid Nigeria on the “Increasing Role of Private Creditors in Nigeria’s Debt Crisis and its Human Costs” in Abuja on Monday.
According to him, Nigeria’s debt was growing and increasingly putting the country in a precarious situation, adding that it had significant implications on human rights.
Rafsanjani said the situation, which calls for collective action to address the debt crisis, also have implications on education, health, climate change, mitigation, and adaption.
He said the past decade had seen the largest, fattest, and most broad-based increase in debt in emerging and developing countries over the past 50 years.
The CISLAC boss added that the total debt in these areas has risen by 54 percentage points of Gross Domestic Product (GDP) to a holistic peak of almost 170 percent of GDP in 2028.
“A major contributor to this increased public debt level is the unprecedented influx of private lenders flooding developing economies as they look for higher returns outside advanced economies.
“This is the sequel to the global financial crisis of 2008.
“According to the Debt Management Office (DMO), Nigeria’s total public debt stock as of June 30, 2022, was N42.84 trillion.
“It is instructive to recall that Nigeria’s debt service cost presently outweighs its revenue with clear signs of economic dangers ahead,” he said.
Rafsanjani said with the refusal of private creditors to embrace debt relief initiatives, the Nigerian government would continue to spend a significant part of its budget to service loans.
He said this would come under stringent conditions including high-interest rates, adding that it would drastically reduce due commitment to more critical socio-economic sectors like health and education.
Rafsanjani said in the Nigerian context, about 90 percent of revenue was devoted to debt serving at the expense of development projects.
He said the group was concerned with the lack of vigorous scrutiny and attention by lawmakers in granting requests for loans without reflecting the provisions of the Fiscal Responsibility Act and the greater implication for the nation’s economic state.
He said that the Nigerian legislators had the constitutional and legislative mandate to approve loan requests only on the basis of public interest and should put this clause as a prerequisite to any approvals they might want to give.
Rafsanjani said the group had inaugurated a research product centred on revealing and challenging the role of private creditors in hindering people’s recoveries to enhance the urgency with which the international community should address the sovereign debt crisis.
