The Director of International Monetary Fund (IMF) Monetary and Capital Markets Department, Mr Tobias Adrian, has expressed concerns, on behalf of the monetary organization, over the building financial relations between Nigeria, among other African developing countries and China.
This statement was made during his speech at the IMF/World Bank Spring Meetings in the United States. He stated that “Loans from China are good, but the countries should consider the terms of the loans. And we urge countries that when they borrow from abroad, that the terms are favourable for the borrower, and should be conforming to the Paris Club arrangements. Let me reiterate that in many frontier markets, we see that the share of debt that is not conforming to the Paris Club standards is on the rise. And that means that if there is any debt restructuring down the road one day, that can be very unfavourable to those countries. So, the borrowing terms, the covenants, are extremely important. And we do see a deterioration in that aspect,”.
He stated that, although the development of a nation is necessary, however, a premium value should be placed on the loan terms and conditions, accepting only those which benefits for the nation.
These business relationships
Mr Adrian also mentioned that Nigeria’s borrowing from international markets, incurring a 24.39trillion debt has drawn the attention of the IMF. Though he understood their necessity, the rollover or repayment risks are also glaring.