The International Monetary Fund, IMF has warned developing countries including Nigeria against taking loans from China. According to IMF, financial in
The International Monetary Fund, IMF has warned developing countries including Nigeria against taking loans from China. According to IMF, financial inflows from China, are, of course, important for development. On the other hand, what is very important in lending arrangements are the terms of the loans and therefore urged countries to make sure that when they borrow from abroad, the terms are favourable.
The IMF recommends that loans should conform with Paris Club arrangements but unfortunately, that is not always the case of loans from China.
On Nigeria’s rising debt levels, the IMF is not overly concerned, as it would allow the country to invest more in developing critical infrastructure. The April 2019 Global Financial Stability Report finds that in spite of significant variability over the past two quarters, financial conditions remained accommodative.
As a result, financial vulnerabilities have continued to build in the sovereign, corporate, and non bank financial sectors in several systemically important countries, leading to elevated medium-term risks. Also, the IMF in the April 2019 Fiscal Monitor Report urged Nigeria to increase Value Added Tax, increase and expand the coverage of excise duties.
