The International Monetary Fund has warned that rising borrowing costs are placing additional pressure on developing economies, making it harder for governments to finance public services and respond to economic shocks.
Speaking during the IMF and World Bank annual meetings in Bangkok on October 14, IMF Managing Director Kristalina Georgieva warned that higher benchmark yields in advanced economies were spilling over into emerging markets and low-income countries.
Average debt-servicing costs in developing economies have risen to 14 per cent of government revenue, compared with six per cent a decade ago, according to the IMF chief.
That shift matters because debt service competes with other demands on public finances. When a larger share of revenue is committed to interest and repayments, governments have less room to fund infrastructure, health services, education and social protection.
The concern is not simply that governments owe money. It is that the cost of servicing that debt can restrict their ability to invest in development.
Nigeria is part of this wider challenge. Finance Minister Taiwo Oyedele, speaking in his capacity as chair of the Group of 24 developing countries, has also warned that the debt burden is undermining inclusive growth in developing economies.
The IMF has identified several pressures, including higher global borrowing costs, declining development assistance and the risk that rapid advances in artificial intelligence could widen the gap between advanced and developing economies.
Countries with reliable electricity, digital infrastructure and access to capital may be better placed to capture the benefits of new technology. Others risk falling further behind.
For Nigeria, the lesson is not to reject borrowing automatically. Public borrowing can support productive investment when projects deliver sufficient economic and social returns.
The question is whether borrowed funds are being used efficiently and whether the benefits justify the costs.
The Federal Government should explain how debt obligations are being balanced against spending on essential services, what safeguards protect the public from wasteful borrowing and which investments are expected to improve productivity and government revenue.
It should also distinguish between borrowing that finances productive assets and borrowing that merely postpones difficult fiscal decisions.
International institutions have responsibilities too. If developing economies face persistently higher financing costs, the terms and availability of concessional funding become important questions for global economic cooperation.
But external conditions cannot replace domestic accountability.
The next indicators to watch include borrowing costs, debt-service burdens, development financing and the extent to which governments protect essential services while meeting their obligations.
Economic stability should not be measured only by the ability to repay creditors. It should also be measured by whether citizens continue to receive the public services and opportunities needed to build secure lives.
By Viewers Corner News