February 12, 2024.Thank you for reading this post, don't forget to subscribe!
The International Monetary Fund has said stalled per-capita growth, poverty and high food insecurity have exacerbated the ongoing cost-of-living crisis in Nigeria.
The report came amid rising inflation, exchange crisis, weak economic growth and business shutdowns.
The global lender said this in a new report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria.’
Also, the IMF’s Executive Board concluded the Post Financing Assessment (PFA) and endorsed the Staff Appraisal, confirming Nigeria’s adequate capacity to repay the Fund a $3.4 billion loan approved in 2020, but pointed out several areas needing urgent attention.
A statement from the IMF read:
“Like many other countries, 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.”
The IMF also expressed optimism that the new administration had made a strong start, tackling deep-rooted structural issues in challenging circumstances.
Immediately, it adopted two policy reforms that its predecessors had shied away-namely fuel subsidy removal and the unification of the official exchange rates.
It added, “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.”
According to data from the Debt Management Office, 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, warned that Nigeria’s rising debt service cost might affect the country’s debt servicing ability, credit rating outlook and borrowing cost.
PwC said debt service could rise from N8.25tn in 2024 to N9.3tn in 2025 and further to N11.1tn in 2026.
“With a high debt servicing to revenue ratio, the government aims to increase domestic debt in 2024 to meet its deficit funding requirements,” the report read in part.(www.naija247news.com).