The International Monetary Fund (IMF) has warned that though Nigeria’s debt to gross domestic product ratio has increased to 28%, it remains lower than the average ratio recorded in sub-Saharan Africa.
But Nairametrics’ fact check revealed that the nation’s debt to GDP (nominal) ratio stands at 19.09%, as at December 2018.
The global lender tasked the Federal Government to increase its drive to create more jobs and revamp its fiscal consolidation.
Details: In an interview with Punch, Senior Resident Representative and Mission Chief for Nigeria, IMF, Amine Mati, explained that the nation’s debt had increased but the level was way below the average for the region.
He said, “Even if we include the Central Bank of Nigeria’s (CBN) overdraft and others, we are talking about debt to GDP ratio that does not go beyond 27 to 28% to GDP and that is including AMCON overdrafts and others.”
Why it matters: On policies to curb debt, he said, “For resource-intensive countries and the non-resource intensive countries, one thing that is common is that when there is trade shock, they have to react. So, you lose revenues, debt goes up.
“In most countries, you would see debt is about 50 per cent to GDP and has increased since 2016 in all cases. But what is new is that most of the countries are back on a sustainable path and have plans to reduce debt through fiscal consolidation and they seem to have stabilized,” he added.
According to him, the growth in per capita to the GDP since 2016 has been sustained for the countries in the Sug-Saharan region. The development has stayed sluggish for the countries because they had to deal with trade shock and how they responded to the shock that led them to their current situation.
Meanwhile, Nairametrics had reported that at the joint annual spring meetings with the World Bank in Washington DC, the IMF expressed worry over Nigeria’s ability to repay its foreign debt, which was put at N24.387 trillion.
In October, the IMF, at another forum called for an effective debt management strategy that would ensure that the amount borrowed posed limited risk and the funds deployed for developmental purposes.