Following recent statistics showing rising incomes for Nigeria, the nation will soon enjoy “blend status” with the World Bank, experts in the Nigerian financial sector have said.
Blend status enable countries that are already borrowing from the World Bank, to have access to concessional resources from International Development Association (IDA).
According to analysts at FBN Capital, in their review of the economy, by becoming a blend country, Nigeria will have access to the International Bank for Reconstruction and Development (IBRD) and still be able to draw from the soft IDA window, albeit at a slightly higher interest rate than currently.
The analysts who said the rising income was a reflection of the country’s low external debt ratio, stressed that the country must make effort to reduce its domestic debt.
The experts said quarterly data release from the Debt Management Office (DMO) serves to remind the market of the strength of Nigeria’s external balance sheet.
According to them, “public external debt at end-June (2012) amounted to just $6.04 billion, equivalent to 2.5 per cent of 2011 GDP. When we allow for official reserves, Nigeria was a net external creditor to the tune of $30.7 billion. The total includes the borrowings of state governments, which are guaranteed by the FGN. These are exceptional indicators for a frontier market. The World Bank Group accounts for 72 per cent of all borrowings. Obligations to the Bank and other multilateral agencies on sub-market rates amount to 82 per cent of the total.”
The Coordinating Minister of the Economy and Minister of Finance, Ngozi Okonjo-Iweala, had recently expressed her concern about the rising cost of domestic debt service.
She therefore envisages a modest shift in the public debt mix, with a little more external and a little less domestic.
ThisDay, Abuja
