12 April 2019

Nigeria: Funding Conditions in Nigeria Are Favourable, But... - IMF

The International Monetary Fund (IMF) has said that funding conditions at the moment in economies such as Nigeria and other Sub-Saharan African countries are very favourable but they may change at some point.

The Financial Counsellor and Director of Monetary and Capital Markets Department of IMF, Tobias Adrian, made the remark at a press briefing on the Global Financial Stability Report (GFSR) at the ongoing Spring Meetings of the World Bank and the IMF in Washington DC.

Adrian said, "Nigeria has been borrowing in the international market, but we worry. So on the one hand; that is very good because it allows Nigeria to invest more, but on the other hand, we do worry about rollover risk going forward. And there is a risk of whether these needs for refinancing can be met in the future."

Government debt, which has been an important source of financing, along with debt servicing cost has risen rapidly in recent years in emerging economies, Adrian noted, adding that overseas investment run by managers tracking popular indices had increased dramatically over the past decade.

He said, "Widening the range of investors can be a positive factor for emerging markets, yet the trend leaves these economies vulnerable to a sudden reversal in capital flows in response to the global trend."

Speaking on the growing investments of China in Africa, he said capital flows in general were important for development, but that what was very important was the lending arrangement and the terms of the loan.

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