By Godwin Dike,April 10, 2019, news
Washington DC – The International Monetary Fund (IMF) has issued a warning to the Federal government of Nigeria, and other developing countries from proceeding to seek for loans from China, as it has its negative and unfavourable circumstances on their economy. This was revealed by Mr Tobias Adrian on Wednesday during the launch of the Global Financial Stability Report for April, 2019 at the IMF/World Bank meetings in Washington D.C, U.S.
He further said “Capital flows, which includes capital flows 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 we urge countries to make sure that when they borrow from abroad the terms are favourable. “In particular, we recommend that loans to countries should conform to Paris Club arrangements and that is not always the case of loans from China,”
Meanwhile, reacting to the rising debt profile levels of Nigeria, Adrian said that the IMF was not overly concerned, as it would allow the country to invest more in developing critical infrastructure. “At the moment, funding conditions in economies such as Nigeria and other sub-Saharan African countries are very favourable but that may change at some point,” he said.
“The April 2019 Global Financial Stability Report (GFSR) 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”
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