- IMF has again warned Nigeria against her debt profile
- The financial body said diversification of economies is imperative in the African region
- The economic counsellor of the IMF, Maurice Obstfeld, also said boosting non-oil revenues and continuing fiscal consolidation plans remain key goals for oil exporters
The International Monetary Fund (IMF) on Tuesday, October 9, said the growing debt profile of Nigerian and Sub-Saharan African economies could face crisis and needs to be carefully managed.
Guardian reports that Nigeria’s debt profile was N22.3 trillion as at June 30, 2018. About two-thirds of the government’s revenues go into servicing interest payments, with the principal still waiting for redemption at maturity.
The IMF also urged the country to guard against the temptation to let higher oil prices delay reforms, warning that despite the recent recovery, oil prices are projected to remain below the 2013 peak.
It also reaffirmed the World Bank Group’s growth reversal at 1.9 per cent from 2.1 per cent for 2018 and 2.3 per cent in 2019, with 0.4 per cent up compared to April 2018 forecast.
Unveiling the World Economic Outlook titled, “Challenges to Steady Growth”, at the ongoing yearly meeting of the IMF/World Bank Group, in Bali, Indonesia.
The economic counsellor of IMF Maurice Obstfeld admitted growth rebound in Nigeria and other sub-Saharan African nations, saying the trend would be buoyed by the impact of recovering oil production and prices.
Nigeria’s growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019, 0.4 percentage point higher than the April 2018 forecast.
Obstfeld said: “Boosting non-oil revenues and continuing fiscal consolidation plans remain key goals for oil exporters.
“The focus should be on growth-friendly fiscal adjustment, with a shift in spending toward productive and social outlays accompanied by effective domestic revenue mobilisation, broadening of tax base and strengthening of revenue administration.
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“Moreover, enhancing financial resilience through proactive banking supervision, ensuring adequate provisioning for losses by banks and improving resolution frameworks to keep expensive public bailouts at bay can help foster a financial system supportive of growth.”
The IMF report also warned that most countries must build fiscal buffers to make room for policy responses to the “next recession” and reduce the long-term costs of servicing high public debts.
The executive director, Jubilee USA, Eric LeCompte, said there was heightened anxiety about the downturn in economic growth.
According to him, the IMF report reminds the world that inequality remains a serious problem, with economies not safe from financial crisis.
Meanwhile, NAIJ.com had reported that the International Monetary Fund warned Nigeria against her debt profile. IMF noted that the debt could rise to as high 60% in countries that had hitherto depended on oil, especially in Nigeria, Gabon and Angola.
IMF said in its 2017 Economic Outlook released that public debt rose above 50% of Gross Domestic Product (GDP) in 22 sub-Saharan African countries at the end of 2016 and could rise to as high 60% in countries that had hitherto depended on oil, especially in Nigeria, Gabon and Angola.
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