"You've Revenue Problem": Despite N87 Trillion Debt Stock, IMF Says Nigeria Not in Debt Distress
- The World Bank has allayed fears that Nigeria is in debt distress despite its N87 trillion public debt
- It stated that the only challenge facing the country is debt servicing due to low revenues
- IMF advised Nigeria to stop unnecessary tax waivers, which limit revenue generation in the country
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Despite Nigeria's debilitating N87 trillion debt profile, the International Monetary Fund (IMF) has said that Africa's largest economy is not in debt distress.
The IMF said this on Friday, October 13, 2023, at the ongoing IMF/World Bank Conference in Marrakesh, Morocco.
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Nigeria's public debt hits N87 trillion
According to the Debt Management Office (DMO), a BusinessDay report says that Nigeria's public debt hit N87 trillion in June 2023 and is estimated to cross 37% of GDP by the end of the year.
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The World Bank experts in Morocco are concerned about Nigeria's low revenue and ability to service its debts, raising concerns about its ability to meet its debt service obligations.
IMF's Director of Africa Department, Abebe Selassie, revealed this at the October 2023 Regional Economic Outlook launch at the IMF and World Bank Annual meetings in Morocco.
A crucial message at the meetings has been the increasing global debt, and both the IMF and the World Bank; Nigeria and other low-income countries must put measures in place to encourage increased revenue mobilization, transparency, and better spending of public resources and stop unnecessary tax cuts draining government revenues and inhibit growth.
IMF says Nigeria has a debt servicing problem
The IMF says these measures will help to avert the risk of debt distress, especially for Sub-Saharan African countries, which will witness a slowed economic growth at 3.3% and Nigeria at 2.9% this year.
Selassie said countries should not base their assessments of debts on the nominal value of a debt stock but instead on how it concerns many other economic variables.
He said Nigerians see the debt as high because they see it in naira terms, but how it relates to GDP and many other indicators, the debts are manageable.
The IMF chief said Nigeria's debt stock is generally manageable, but debt servicing is much more difficult.
CBN's decision on 43 items manageable
He stated that the debt servicing is hindered by Nigeria's not generating enough non-oil tax revenue.
The IMF applauded the decision of the Central Bank of Nigeria to lift Forex restriction on 43 items, stressing that the reversal was a positive move in recalibrating Nigeria's economy.
He said:
"On the trade restrictions, our view has always been in Nigeria, and many other cases is that our economies now are so complex and sophisticated, and I do not think these restrictions work.
"The best way to manage modern economies is for government authorities to have fiscal and monetary policies deliver is not say I don't like these goods and don't want them to come in.
"That creates unhealthy distortion, and of course, there are tax policies you can also use if you want to lean against certain types of imports. But in general, the direction the CBN has moved is a helpful one.
IMF gives Nigeria, Ghana, and Other African countries conditions For debt cancellation
Legit.ng reported that the International Monetary Fund (IMF) has dismissed the idea of total debt cancellation for Nigeria, Ghana, and other African countries.
The IMF African Department Director, Abebe Selassie, said about 50% of total debts in African countries are domestic, making debt cancellations difficult.
According to the Debt Management Office (DMO), Nigeria's total debt stock stands at N87 trillion as of June 30, 2023.
Source: Legit.ng
