The International Monetary Fund (IMF) has expressed its readiness to grant more loans to Nigeria, and other emerging market countries within its membership through financial safety net.
Speaking during an online media parley in Washington DC, the IMF said the fund will come through financial safety net, which is expected to protect member countries from losing their financial security or derailing from long-term financial goals.
The IMF reiterated the importance of strengthening global financial safety net, and ensuring that countries having access to support.
In the media parley transcript posted on its website, the Fund called actions to strengthen policy frameworks and reduce vulnerabilities in areas of monetary policy, fiscal policy, and financial support for business.
“We emphasize the importance of the global financial safety net, and countries having access to that as appropriate, including, of course, to support from the IMF, which we stand ready to provide as needed by our membership,” it said.
Data from Debt Management Office showed that Nigeria’s total public debt stock increased to N39.56 trillion in 2021 from N32.92 trillion in 2020.
A breakdown of the debt statistics as at December 31, 2020 showed that Nigeria owes International Development Association $11.12 billion; Eurobonds, $10. 8 billion; IMF $3.53 billion; Exim Bank of China, $3.26 billion, among others.
The total debt includes new borrowings by the Federal Government and the sub-nationals. The borrowed funds are helping in financing the budget deficit, capital projects and support economic recovery.
Although Nigeria’s current debt to GDP 22.47 per cent is relatively low, giving it more room to borrow, but the its inability to generate adequate revenue has worsened its debt problem.
Debt to Gross Domestic Product (GDP) Ratio stood at 22.47 per cent compared to 21.61 per cent in 2020. At this level, the ratio is within Nigeria’s self-imposed limit of 40 per cent, the World Bank/IMF’s recommended limit of 55 per cent for countries within Nigeria’s peer group and 70 per cent for ECOWAS countries.
Nigeria’s revenue to GDP Ratio has remained low at nine per cent compared to comparable countries like Ghana at 12.5 per cent; Kenya at 16.6 per cent; Angola at 20.9 per cent; and South Africa at 25.2 per cent.
The IMF said: “The sharp rise in global oil prices represents an important terms of trade shock. With macro-economic implications, it will lead to higher inflation and current account deficit. But the impact on the current account could potentially be partially offset by favorable movements in prices of commodities”.
It added that evaluating the impact of monetary policy tightening by the Fed on emerging markets is more difficult now and should be done on a case-by-case basis given the considerable differentiation between countries.
Findings showed that many debts, especially Eurobonds contracts have non-disclosure clauses, and should be made more balanced to ensure transparency and credibility of the debt data.
The World Bank and IMF are working together to support the implementation of the G20 Common Framework that requires greater transparency reconciling every country’s debt with creditors.
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