NIGERIA will face a higher debt-to-gross domestic product (GDP) ratio next year, according to the International Monetary Fund (IMF).
The IMF gave this projection in its October 2023 report on “Africa: Special Issue: In Search of More Powerful Expansion and Resilience. “
It says Nigeria’s public debt would rise to 4. 3 percent of GDP in 2024, up from 38. 8 percent in 2023.
Nigeria’s public debt relative to GDP has risen from 21. 9 per cent in 2019 to 34. 5 per cent in the year of Covid, to 36. 5 per cent in 2021 and 39. 6 per cent in 2022.
As they emerge from the COVID-19 pandemic, a sluggish global economy, global inflation, high borrowing costs, and a cost-of-living crisis have affected Nigeria and other countries in sub-Saharan Africa.
Inflation remains too high, loan prices remain high, and exchange rate pressures persist; Political instability remains an ongoing concern.
The IMF report also forecasts that Nigeria’s real GDP would rise from 2. 9 per cent this year to 3. 1 per cent in 2024.
Nigeria’s real GDP, an inflation-adjusted measure that reflects the price of all goods produced by an economy in a given year, is expected to reach $489. 8 billion by the end of 2023 and peak at around $504. 99 billion in 2024.
Faced with the debt burden borne by Nigeria and other low-income countries, the G24, an organization of 38 members plus China, said there are only high and emerging levels of public debt with many emerging countries, but also that countries bear an unsustainable debt burden, CIRI reported.
However, the organization suggested that the Bretton Woods institutions (IBWs) find a lasting solution to the debt and take steps to increase the availability of financing for emerging countries.
In its latest report on ‘Nigeria’s Total Public Debt Portfolio’, the Debt Management Office (DMO) said that Nigeria’s remarkable debt amounted to 87. 38 trillion naira at the end of the second quarter of this year, representing a total external debt of 33 billion naira. . 25 trillion naira and a total domestic debt of 54. 13 trillion naira.
The country’s inflation has also worsened to 25. 80, consistent with the penny, as business activity continues to slow due to emerging costs of inputs, food, and shipping tariffs.
According to the IMF, there is hope that the economy will recover despite emerging market debt and skyrocketing inflation.
Nigeria’s projected real GDP expansion will be 3. 1 percent in 2024 and four percent in sub-Saharan Africa; however, urging the region to take some precautionary measures.
“To ensure that the coming recovery is more than just a glimpse of sunshine, it is necessary for the government to oppose an ill-timed easing of stabilization policies while focusing on reforms aimed at making up for the lost floor after the four-year crisis and creating new areas to address the region’s pressing needs for progress,” the IMF said.
Meanwhile, at a press briefing at the release of the department’s most recent Regional Economic Outlook, the Director of the IMF’s Africa Department, Abebe Aemro Selassie, said the expansion is expected to be broad-based, indicating that the effects are encouraging given external headwinds.
Selassie held the press conference on the sidelines of the IMF’s annual meeting, which began on Monday, October 9 and will continue until Sunday, October 15 in Marrakech, Morocco.
He suggested African governments focus on four policy priorities: fighting inflation, reducing debt vulnerabilities, allowing exchange rates to depreciate when necessary, and making investments in priority areas such as health, education and infrastructure.
“Our region is home to a highly artistic and fast-growing population. We want to invest in them now to enable them to succeed in their full future and make this 21st century Africa’s century,” Selassie said.