The International Monetary Fund (IMF) highlighted the persistent challenge of high debt servicing costs in Nigeria and other low-income countries. Despite the absence of recent debt relief requests, the multilateral lender underscored the growing burden of servicing debts for nations in this category.
The report acknowledged a positive trend, as no notable requests for comprehensive debt relief had been made by low-income countries since Ghana’s appeal over a year ago. However, the IMF emphasised the urgent need for policy reforms to address mounting challenges.
Commending Nigeria and three other countries for recent subsidy reforms aimed at boosting revenue, the IMF acknowledged steps taken to create space for development spending. Notably, the report recognised efforts by Angola, The Gambia, Nigeria, and Zambia in implementing significant energy subsidy reforms. While lauding these positive steps, the IMF expressed concern over the lagging progress in revenue generation across many countries, particularly in broadening tax bases, reducing exemptions, and enhancing tax administration efficiency.
The report highlighted the need for countries to act promptly to boost growth, increase revenue, and avoid a costly debt crisis. The report underscored the disparity in revenue generation, revealing that Sub-Saharan African countries raised only 13% of GDP in revenues in 2022, compared to 18% in other emerging economies and developing countries and 27% in advanced economies. The IMF emphasised that countries with high debt vulnerabilities cannot afford to delay policy reforms.
Nigeria’s public debt profile, according to the Debt Management Office, rose to N87.91tn at the end of Q3 2023. The Federal Government’s plan to allocate N8.25 trillion for debt servicing in 2024, representing 45% of projected income, has drawn criticism. The World Bank warned of a potential debt service-to-revenue ratio of 160% by 2027 unless significant reforms are implemented.
The IMF stressed the need for policy measures to alleviate financing pressures and enhance debt sustainability. While acknowledging progress in some areas, the report urged countries to prioritise reforms to boost growth, capture more revenue, and improve key debt metrics.
