The International Monetary Fund (IMF) has said Nigeria is currently not in debt distress despite its public debt standing at a whopping N87 trillion.
This declaration was made during the launch of the October 2023 Regional Economic Outlook (REO) at the week-long Annual meetings of the IMF and World Bank in Marrakech, Morocco.
Abebe Aemro Selassie, the director of the African Department at the IMF, explained that while Nigeria’s debt appears alarming in nominal terms, it remains manageable when assessed in relation to the country’s GDP and other economic indicators.
According to Selassie, the real concern is the woefully low revenue generation in Africa’s largest economy, which has placed enormous pressure on government finances and debt servicing.
The IMF, in conjunction with the World Bank, has recommended a series of measures to avert debt distress, particularly for Sub-Saharan Africa, where economic growth is projected to slow down in 2023.
These measures include increasing revenue mobilization, improving transparency, enhancing the efficient use of public resources, and eliminating unnecessary tax concessions that undermine government revenues and economic growth.
Selassie also praised the recent reversal of the 8-year-old Central Bank of Nigeria (CBN) policy that restricted access to foreign exchange for 43 imported items.
He highlighted the importance of fiscal and monetary policies in managing the complexities of modern economies, encouraging governments to employ tax policies instead of trade restrictions to address economic imbalances.
While the IMF’s assurance provides some relief, Nigeria must now focus on enhancing revenue streams to ensure its financial stability and sustainable economic growth.