IMF Cautions FG On Use Of Borrowed Money

Yemisi Izuora.

The International Monetary Fund (IMF) has advised Nigeria that wrongful application of borrowed funds will be inimical to the economy.

IMF warned that the growth being experienced will be at risk if Nigeria and other countries do not put borrowed funds to good use.

The institution issued the warning while unveiling the Global Financial Stability report at its headquarters in Washington.

“External borrowing in emerging markets and low-income countries have increased,” Tobias Adiran, financial counsellor and director of monetary and capital market of the organisation said.

“Portfolio inflows to emerging markets economies are on track to reach $300 billion in 2017, more than twice the totals over the past two years. This is broadly good news, supporting growth prospects in these countries. But this greater reliance on foreign borrowing may at some point become a vulnerability, if these resources are not put to good use.”

He said it is relatively easy for Sub-Saharan African countries to get funding and debt issuance in these countries have been at high levels.

“Funding for Sub Saharan African countries have very favourable conditions in fact debt issuance in Sub Saharan Africa has been at very high levels. The key question is how are those funds used by those countries? Are countries using those funds in order to ensure financial stability and ensure sustainable outlook?” he asked.

“The main risk we see is that countries continue to build up their debt because it’s cheap, they can roll over existing debt and that might generate

“We present a scenario where this kind of buoyant financial situation continues to exist for another two years and some adverse shock hits and some countries are hit particularly hard.

“This is no time for complacency. Action is required because vulnerabilities are building. This could put growth at risk in the future.

“Major central banks should ensure a smooth normalization of monetary policy and financial regulators should deploy macroprudential policies and consider extending the boundary of such tools to curb rising leverage and growing stability risks.”

In recent times, the federal government through the Debt Management Office have issued several debt facilities like the Sukuk, savings bonds and treasury bills to fund the 2017 debt deficit and fund infrastructural projects.

The Ikeja Electric has signed a N570million Memorandum of Understanding (MoU)  with a local meter manufacturing company, Mojec  International  Limited for the supply of distribution transformer meters to its customers.
The Acting Chief Executive Officer  of the company,Mr.Anthony Youdeowei, said at the signing ceremony in Lagos that the  development is a further demonstration of Ikeja Electric’s long term commitment  to invest the required sums to ensure there is a turn around in the experience of the company’s customers.
The company’s boss, who was represented at the event by its Chief Financial  Officer, Olubunmi Olukoju, said Ikeja Electric would continue  to massively invest in areas to strengthen  its network  as well as sustain its meter roll out plan.
He added  that the company’s current strategy of metering commercial points is crucial as it allows his company to accurately  determine the amount of energy consumed on a feeder by feeder basis and after careful consideration.
He said his company’s  partnership  with Mojec International  Limited was borne out of the need to encourage indigenous meter manufacturers in the country to fill the metering gap.
“We are also proud to partner with Mojec International  Limited, a local content manufacturer that has proved their worth as far as this sector is concerned. We are a proudly Nigerian company which remains committed  to the Nigerian vision. By partnering with us on this, we will achieve total metering of our feeders  and distribution  transformers  and proceed further into other areas of mutual interest”,he added.
He revealed that the company would soon unveil a loyalty raffle draw that will reward twenty five of its customers  for a year, adding that similar gesture would  also be extended to customers who use the company’s  USSD platform to pay their bills with instant credit each time a transaction is successfully completed.
Commending the Nigerian Electric Regulatory  Commission  for considering  penalties and fines for energy theft and other criminal activities, the company’s boss expressed optimism that the development  will discourage wanton attacks on power firms assets in the country
He added:”Progress in these  areas is very encouraging  even as we continue  to contend with other issues like meter bypass, assault on our staff, vandalizing of assets, and the general aparthy to pay for energy consumed”.
Speaking,Managing Director of Mojec International Limited, Chantalle Abdul, expressed satisfaction over the partnership on the metering.
She said her company went through a rigorous selection process to win bid for the partnership, adding that the company would leverage on its quality staff and experience to give the partnership its worth.

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