The International Monetary Fund (IMF) has projected Nigeria’s public debt to Gross Domestic Product (GDP) ratio to reach 46.6 percent in 2024, and 46.8 percent in 2025.
This represents a 0.3 percentage points and 0.5 percentage points growth respectively when compared with the IMF projection for 2023.
The report by Nigeria’s Vanguard newspaper on Monday said that the IMF disclosed this in its Fiscal Monitor for April 2024 titled: “Fiscal policy in the great election year”.
It also downgraded the country’s fiscal balance-to-GDP ratio to -4.6 percent in 2024 from -4.2 percent in 2023.
According to the IMF, large shares of loans on concessional terms, high inflation, and resulting favourable interest-growth differentials had helped contain average public-debt-to-GDP ratios in low-income developing countries, at around 50 percent of GDP since 2020, on average.
It added: “An exception was an uptick to 53 percent of GDP in 2023, largely driven by exchange rate depreciation in Nigeria. ‘’However, countries are carrying heavy debt-service burdens, amounting to 13 percent of total spending and almost 25 percent of tax revenues, on average, in 2023 (about double the level 15 years ago).
“In Nigeria, the debt-service burden amounts to around 56 percent of tax revenues. Such high debt-servicing costs prevent low-income developing countries from spending more on essential services and critical investment to improve economic resilience and reduce poverty.
“Economies in this country group are also borrowing increasingly on commercial terms, amplifying their exposure to interest rate and foreign exchange risks.
“Accordingly, risks associated with debt refinancing are high, as repayments of substantial amounts of external debt—about $60 billion—are coming due in 2024–25, three times the average in the 2010s (Holland and Pazarbasioglu 2024).”
GIK/APA
IMF projects Nigeria’s debt-to-GDP ratio to peak at 46.6% in 2024
