The IMF has declared that Nigeria’s debt is at a moderate risk level, advising targeted social interventions and improved domestic revenue generation by the government. The country achieved a record electricity generation of 6,003 megawatts, reflecting progress in energy reforms. Ongoing fiscal reforms and stakeholder collaboration are vital for sustaining economic growth.
The International Monetary Fund (IMF) has reassured Nigerians that the nation’s debt level is considered “moderate and not high risk.” Gita Gopinath, the IMF’s First Deputy Managing Director, expressed this view during an exclusive interview in Lagos. In a meeting with Finance Minister Wale Edun, Gopinath acknowledged Nigeria’s current economic challenges and emphasized the necessity for targeted social interventions by the government.
As of September 30, 2024, Nigeria’s total public debt reached N142.3 trillion, up from N134.3 trillion in June. The rise in debt is attributed to the devaluation of the exchange rate. The Debt Management Office reports a marginal increase in external debt, reflecting a 9.22 percent rise from N63.07 trillion to N68.89 trillion during the same period.
The IMF defines a “moderate debt level” as manageable and sustainable, indicating that the country can meet financial obligations while maintaining some spending flexibility. Gopinath remarked on the sustainability of Nigeria’s debt, stating, “We (IMF) assess debt sustainability for countries every year and we did this for Nigeria in our report for 2024. Our assessment was that the risk of sovereign stress for Nigeria is moderate and not high risk.”
Gopinath advised against increasing debt levels, stressing the importance of maintaining a moderate approach. She highlighted the significant concern that 75% of the government’s revenue is allocated to interest payments, limiting funds available for social support and development initiatives. To enhance fiscal sustainability, she recommended a focus on domestic revenue mobilization and necessary macro-adjustments to lower inflation and interest payments.
The IMF called for the government to utilize savings from the cessation of fuel subsidies to boost development spending. Gopinath noted the importance of improving tax administration, investing in automation, and addressing tax exemptions to raise tax revenues. Furthermore, she suggested enhancing infrastructure and business conditions to attract investment and growth.
To stabilize the naira exchange rate, Gopinath urged the Central Bank of Nigeria to maintain tight monetary policy, contributing to lower inflation rates. She highlighted the need for efficient forex market functioning and aligned fiscal policies to contain deficits, thus avoiding detrimental impacts on the naira.
On the duration of the tight monetary policy, Gopinath noted that while complaints have arisen from the private sector, it is crucial to maintain high-interest rates until inflation is significantly reduced. She emphasized a cautious approach, advocating for a gradual decline in inflation without prematurely declaring financial stability.
In discussions with the Finance Minister, it was noted that Nigeria is actively addressing high living costs through enhanced social investment programs. The government is transitioning to a biometric-based system for improved accountability. Moreover, crude oil production has risen, impacting national revenue positively.
The Nigerian government has recently reached a historic milestone in electricity generation, achieving a peak of 6,003 megawatts, the highest in its history. Efforts to improve the electricity sector have included tariff reviews to create a sustainable environment for investment and growth.
The Minister of Power emphasized ongoing reforms and the critical nature of sustaining improvements in power supply to support economic growth. The government plans to regularize tariffs further to facilitate consumer payment for energy consumed, with aims to reach 7,000 MW of generation capacity.
The government underscored the necessity of collaboration among stakeholders to maintain progress and drive future developments in the power sector, demonstrating a commitment to improving service delivery and fostering economic growth. The Minister of Power also initiated a planning committee for the upcoming National Council on Power conference, which aims to address the power sector’s reformative discussions and resolutions.
In summary, the IMF has confirmed that Nigeria’s debt situation is moderate and manageable, urging the government to focus on domestic revenue enhancement and strategic social interventions to sustain economic stability. Recent advancements in power generation signal progress in meeting energy demands, while comprehensive reforms are essential for ongoing development. Collaboration among stakeholders remains crucial to driving continued improvements in both fiscal and power sectors, ultimately fostering Nigeria’s economic growth.
Original Source: www.arise.tv
