As the world continue to battle covid-19 pandemic, experts are concerned that low income countries may heap up debts which would hamper economic development. Due to slow economic activities as a result of various precautionary measures adopted by countries to contain the spread of the disease, most low income countries are left with the borrowing to fund their budget.
According to a World Bank’s International Debt Statistics 2020, released in the last quarter of 2019, the total debt of low and middle income countries upped 5.3 percent to $7.8 trillion in 2018.
The IDS also indicated that excluding South Africa, the debt stocks of Sub-Saharan countries rose by 8 percent with over half the countries in the region have seen external debt stocks double since 2009.
The World Bank Group President, David Malpass, advised that, “To grow faster, many developing countries need more investment that meets their development goals”
He also advised that debt transparency should extend to all forms of government commitments, both explicit and implicit.
“Transparency is a critical part of attracting more investment and building an efficient allocation of capital, and these are essential in our work to improve development outcomes,” he said.
In Nigeria, stakeholders have continued to express serious concern over the mounting debt of the government. In March, the Senate approved a loan of $22.7 billion for the government after the Debt Management Office (DMO), revealed that the total debt burden of the country was at $85.4 billion.
IMF also approved Nigeria’s request for emergency financial assistance of $3.4bn under the Rapid Financing Instrument (RFI) to cover financial emergencies created by the COVID-19 pandemic.
Yet the Buhari government in June got the approval of the Senate to get another loan of $5.513billion to enable the administration fund the revised 2020 budget and execute some critical projects.The federal government in it’s proposal to the Senate said the loan will also be used to support state governments in stimulating their economy, which has been adversely hit by the coronavirus pandemic.
The concern of many Nigerians lies in values the debt adds to the country, considering the mounting debt profile, yet the economy is weak and less productive. According to Statistics from the DMO, debt service figures revealed that 99.2 percent of the first quarter of 2020 fiscal revenue was used to service debt.
