The International Monetary Fund (IMF) has caution Nigerian government and other developing countries to be wary of taking anyhow loan from Chinese government due to its unfavourable loan conditions.
Mr. Tobias Adrian, the Financial Counsellor and Director of the Monetary and Capital Markets Department of the IMF disclosed this on Wednesday in Washington D.C during the launch of the Global Financial Stability Report for April 2019 at the IMF/World Bank meetings.
He said, “Capital flows, which comprises of capital flows from China, are, of course good and important for development. However, “On the other hand, what is very important in lending agreement are the terms and conditions of the loans, therefore, we implore countries to make wise decision and ensure that when they borrow from abroad, the terms are favourable.
Adrian added, “In particular, we recommend that loans to countries should always conform to Paris Club arrangements and that is not always attainable when it come to loans from China,”.
Meanwhile, on Nigeria’s increasing debt levels, Adrian revealed that the IMF was not worried, as it would allow the country to spend more in putting up critical infrastructure.
He said “At at present, funding conditions in economies such as Nigeria and other sub-Saharan African countries are very favourable, however, it may change at some point,”.
The April 2019 Global Financial Stability Report revealed that although there is large inconsistency over the past two quarters, however, financial conditions remained accommodative.
Consequently, financial vulnerabilities have been persistently building in the sovereign, corporate, and non bank financial sectors in several systemically important countries, pointing to eminent medium-term risks.
Furthermore, the IMF in the April 2019 Fiscal Monitor Report advised Nigeria government to increase Value Added Tax (VAT), increase and expand the coverage of excise duties.
The IMF applauded the country’s recent Strategic Revenue Growth Initiative, which include all-inclusive approach to tax reform.
