Nigeria could be heading for a cash crunch as international lenders ignore Africa’s largest economy, according to the Debt Management Office (DMO).
The DMO disclosed that global investors and lenders are shunning Nigeria having been labeled with an economic rating of Category “B”.
It would be recalled that Moody’s and Fitch ratings recently downgraded Nigeria to Category ‘B’ economy.
If this persists, Nigeria will struggle to finance its 2023 budget deficit estimated at N10.7 trillion, more than half of the nation’s total budget of N20.5 trillion, Investors King reports.
According to the Director-General of the Debt Management Office (DMO), Patience Oniha, Nigeria must improve its revenue generation and devise alternative sources of funds both in the international and local markets.
While appearing before the House of Representatives Committee on Aids, Loans and Debt Management to defend the DMO’s 2023 budget, Oniha noted that the country is now looking towards new lenders in America and Europe which might come with stringent conditions.
She stated that before now, Nigeria enjoyed a great deal of courtesy in the global financial market. “The reality is that if it were before, by now we would have issued Eurobonds to raise the money and we would be in good business. The international markets are not looking for countries with our ratings –B ratings,” she said.
In addition, global crises such as the invasion of Ukraine by Russia which has led to energy crises and global inflation, and the threat of recession have exacerbated the situation for most countries.
“Inflation rates are high, interest rates are high and investors are saying there are a lot of uncertainties as to what will happen” she noted.
Oniha further revealed that global investors now feel comfortable putting their money in securities issued by the G-7 countries.
The G-7 countries include Canada, France, Germany, Italy, Japan, the United States, and the United Kingdom.
