Nigeria at near full unemployment, why Edo state loan request was rejected—DMO

The Director General, Debt Management Office DMO, Dr. Abraham Nwankwo yesterday said that the controversial loan request of Edo state government in the last administration was refused because the state government wanted to borrow from banks in anticipation of loans from the World Bank. He said that Edo state wanted to take a bridging loan from commercial banks as it was waiting to get loans from the World Bank. He said after due analysis of the application that was made to the ministry of Finance for which DMO was asked to assess, it was found that while the World Bank loan was being offered at concessionary interest rate, the state wanted to borrow from banks at commercial interest rate and would use the World Bank loan to off set the loans obtained from banks.
He said the state was duly advised that it was not economical for it to use loans obtained at very low interest rate to off set loans it is planning to take from banks at higher interest rate as it will cost the state more than what it got from the World Bank facility to liquidate the loans from banks. He said the state got the World Bank facility it was waiting for that had already been approved. He said that there was no political undertone the issue.
Dr. Nwankwo said that Nigeria is currently near full unemployment of its resources and has a lot of room to play around with to grow the economy. He said while other developed economies are near full employment of their internal resources, Nigeria has a lot of human, natural and material resources that have idle and excess capacity. He said if Nigerians are committed to developing the nation, the nation has the potential of over-coming its current challenges in three to four years.
He said that foreign investors who have waning sentiment on Nigeria markets are doing so because they do not understand the strength of the Nigeria economy. He said there are a lot of idle resources that when fully tapped into will jump start the economy. He said because of the lack of under standing of these investors and officials of the World Bank, they had advised that Nigeria could borrow up to 56 per cent of its current Gross Domestic Product. He said that they who are the Nigerian Economist who know the Nigeria economy declined the advice knowing fully well that tax system in Nigeria does not keep pace with the GDP. He said they opted for 19 per cent and as a result the crash in crude oil prices has minimal impact on Nigeria’s debt sustainability. He said that Nigerians have nothing to fear as the current debt was far below the global benchmark for countries of Nigeria group.
He said that Nigerians should develop positive attitude toward everything Nigeria and change the wrong negative perception of the country’s investment climate by foreign investors. He said that the delisting of Nigeria from JPMorgan had no direct effect on Nigeria bond market as the maket was already developed before the bonds were listed. According to him JPMorgan list bonds they consider good and credible. They do not develop markets. Nigeria bond market was already developed before the listing.