Nigeria May Face More Economic Crisis, Says IMF
The International Monetary Fund has explained that stalled per-capita growth, poverty and high food insecurity have exacerbated the ongoing cost-of-living crisis in Nigeria.
The report was made amid rising inflation, exchange crisis, weak economic growth and business shutdowns.
This was disclosed by he global lender in a new report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria.’
According to the report, headline inflation reached 27 percent year-on-year in October (food inflation 32 per cent), reflecting the effects of fuel subsidy removal, exchange rate depreciation, and poor agricultural production in the country.
It said, “Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation.
“Per-capita growth in Nigeria has stalled, poverty and food insecurity are high, exacerbating the cost-of-living crisis. Low reserves and very limited fiscal space constrain the authorities’ option space. Against this backdrop, the authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high and inclusive growth is appropriate.”
Amid Nigeria’s current economic difficulties, it further indicated that on January 12, 2024, the Executive Board of the International Monetary Fund concluded the Post Financing Assessment and endorsed the Staff Appraisal on a lapse-of-time basis. It added that Nigeria’s capacity to repay the IMF is adequate.
The IMF also applauded how the new administration had made a strong start, tackling deep-rooted structural issues in challenging circumstances.
“The new CBN team has made price stability its core mandate and demonstrated this resolve by dropping its previous role in development finance. On the fiscal side, the authorities are developing an ambitious domestic revenue mobilisation agenda," it added.
A data from the Debt Management Office has shown that Nigeria currently owes the IMF the sum of $2.8bn. The Federal Government, in its 2024 budget plans to spend about N8.2tn on debt servicing.
Professional services firm, PricewaterhouseCoopers in a new report, expressed concern that Nigeria’s rising debt service cost might affect the country’s debt servicing ability, credit rating outlook and borrowing cost.
The report read in part, “With a high debt servicing to revenue ratio, the government aims to increase domestic debt in 2024 to meet its deficit funding requirements."