Debt for growth not bad, says AfDB
By Lucy Ogalue
The African Development Bank’s Chief Economist, Kevin Urama, says debt for growth for countries on the continent should not carry any negative connotation.
Urama, who is also the Vice-President, Governance and Knowledge Management at AfDB, said this at a pre-media conference held virtually to herald the 2024 AfDB Annual Meetings.
According to him, the debt to GDP ratio in Nigeria is still sustainable, but the issue in Nigeria is with regards to debt to revenue ratio.
He, however, commended the President Bola Tinubu-led administration for initiating various strategies to improve revenue mobilisation in the country.
Urama said that by increasing the revenue mobilisation, the country would be able to rebalance that ratio and move forward.
“The point I need to make clearly is that debt is not a bad thing. Debt for growth is always the means for driving transformative growth in countries.
“The issue is not about the debt. It is about the quality of the debt. In terms of what you borrow, on what terms, how transparent they are and what you use the resources borrowed to do.
“If it is invested in growth enhancing infrastructure and productive infrastructure, you are going to be able to generate revenue to be able to repay the loans and also go ahead to grow your economy,” he said.
According to Urama, debt should not ordinarily carry negative connotations, only bad debt should cause such.
“So, debt is bad when you borrow on wrong terms, when it is not transparent and people don’t know what is happening.
“And when the resources are not used properly, then you can get into the debt sustainability challenge,” he said.
The AfDB vice-president said the Public Financial Management Academy of the bank was, however, established to assist countries not to get to the level of bad debt.
“So when you are borrowing, you know exactly when, who, what terms and how to use those loans in order to drive transformative growth in countries,” Urama said. (NAN)(www.nannews.ng)
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Edited by AbdulFatai Beki/Ismail Abdulaziz
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