The International Monetary Fund (IMF) has announced that Nigeria's external debt will reach 25% of its gross domestic product (GDP) by 2025.
According to data from the IMF’s Sub-Saharan Africa Regional Outlook, Nigeria’s external debt-to-GDP ratio will increase from 11.9% in the same period in 2023 to 22.7% in October 2024 and reach 25% next year. It is expected that this will happen.
High inflation rates, fiscal deficits and rising debt burdens continue to undermine the economic stability of many countries, including Angola, Ethiopia, Ghana and Nigeria, according to the IMF’s latest regional outlook released Friday in Washington. .
He also expressed concern over Nigeria’s social measures aimed at mitigating the negative impact of recent economic reforms, specifically the removal of fuel subsidies and the unification of exchange rates.
According to the IMF, these efforts are moving too slowly, leaving Nigerians struggling with high living costs as the economy faces the effects of inflation and other reforms.
The IMF has long advised Nigeria to eliminate what it calls “heavy fuel subsidies” and standardize the naira exchange rate, but these changes have placed a heavy burden on the country’s poorest people. also admits. IMF Africa Director Abebe Ayemuro Selassie said at a press conference on the IMF’s Sub-Saharan Africa Regional Economic Outlook in November 2018, “While we welcome these reforms, they come with significant internal adjustment costs.” I am also aware of that.” IMF/World Bank Annual Meeting to be held in Washington DC on Friday
Mr Selassie stressed that a more robust approach could have been adopted to protect the most vulnerable. “We can do a better job of rolling out social protection, especially to the most vulnerable," he said in response to questions from Business Day.
Acknowledging the impact that the reforms will have on the daily lives of Nigerians, he added: “The immediate effects of reform always cause disruption. There is absolutely no doubt that the current situation is extremely difficult. The food price shocks of recent years have been very severe, and now fuel prices Rising prices are putting pressure on other essential goods.”
IMF Directors emphasized the importance of directing savings from subsidy elimination and exchange rate reform to support low-income households. “We believe that some of the savings from eliminating exchange rate subsidies through fuel subsidy reform should go to mitigating the impact on the lowest-income households,” he said, calling for targeted measures. He pointed out the need for social assistance. As Nigerians adapt to changes in the economy.
Responding to the perception that the current predicament is due to the reforms recommended by the IMF, Selassie explained that Nigeria’s economic challenges are deep-rooted and not solely due to recent changes. “Other imbalances existed in the economy, such as high inflation and dwindling foreign exchange reserves, when subsidies were high and exchange rates were kept artificially low,” he said. Selassie said these factors were undermining the government’s ability to invest in critical areas such as health and education, taking away funds while subsidies continued to drain public resources. “It is not sustainable and the pressure being felt is impacting on health and education, resulting in pain elsewhere,” he added.
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