The International Monetary Fund (IMF) yesterday warned Nigeria and Sub-Saharan African economies to check rising levels of debts, diversify their revenue bases or face crisis.
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 advised 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.
On the rising obligations of the sub-region’s economies, Obstfeld pointed out that strengthening fiscal positions was necessary to reduce debt vulnerabilities.
“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.
“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.
IMF’s disclosure came as President Muhammadu Buhari seeks approval for a fresh $2,868,540,000 external loan.