IMF Caution Nigeria, Others On Chinese Loans

The International Monetary Fund (IMF) has called for the withdrawal of loans from China by Nigeria and other developing countries.

Tobias Adrian who said this on Wednesday during the launch of the Global Financial Stability, noted that the conditions of the loans are unfavourable.

“Capital flows, which includes capital flows from China are of course important for development,” he said.

“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 with Paris Club arrangements and that is not always the case of loans from China.”

Adrian said the IMF was not overly concerned about Nigeria's rising debt levels, as it would allow the country to invest more in critical infrastructure development.

“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.

The IMF also urged Nigeria to increase Value Added Tax, increase and expand the coverage of excise duties in the April 2019 Fiscal Monitor Report.





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