The IMF has characterized Nigeria’s debt as moderate and not high risk, urging the government to pursue targeted social interventions. As of September 30, 2024, the nation’s debt has risen to N142.3 trillion due to exchange rate devaluation. Recommendations include boosting domestic revenue and improving electricity generation, which recently peaked at 6,003 megawatts, marking a historic high for the country.
The International Monetary Fund (IMF) has alleviated concerns regarding Nigeria’s debt situation, labeling it as “moderate and not high risk.” Gita Gopinath, the IMF’s First Deputy Managing Director, conveyed this assurance during a recent interview in Lagos. She addressed Nigeria’s current economic hurdles, advocating for targeted social interventions from the government to navigate these issues effectively.
As of September 30, 2024, Nigeria’s public debt stands at N142.3 trillion, a noticeable increase from N134.3 trillion in June. This rise is attributed to exchange rate devaluation, which has incrementally affected both domestic and external debt figures, leading to an increase in external debt valued at approximately $43.03 billion.
Gopinath clarified that while Nigeria’s debt is categorized as moderate, it is vital for the country to maintain this level without escalating into a high-risk category. She emphasized the importance of domestic revenue mobilization, which is critical for funding social support and development initiatives, especially since 75% of government revenues are currently allocated to servicing interest payments.
In her recommendations to the Nigerian government, Gopinath highlighted the savings potential from eliminating fuel subsidies, which should be redirected towards improving public services to bolster social investments. Additionally, she encouraged enhancements in administration, particularly through automation and digitalization strategies to boost tax revenues.
Regarding the monetary policy of the Central Bank of Nigeria (CBN), Gopinath advised a tight monetary stance to stabilize the currency and lower inflation rates. She acknowledged that keeping the foreign exchange market operational and efficient is crucial for maintaining economic confidence and reducing volatility.
During discussions, Finance Minister Wale Edun outlined the government’s initiatives to enhance social investment programs and tax reforms aimed at improving domestic revenue. He also reported an increase in crude oil production as a measure to boost national income, with production levels rising to approximately 1.7 to 1.8 million barrels per day.
An announcement was made regarding Nigeria’s achievement in electricity generation, reaching a peak of 6,003 megawatts, marking the highest level recorded in its history. The government expressed optimism for sustaining and improving these power generation figures as they are essential for economic growth.
Furthermore, the government is implementing tariff reviews within the power sector to create a better investment climate. Minister Adelabu noted that adjusting tariffs to reflect true costs of power generation is crucial for fostering private sector participation and capital influx into energy infrastructure.
In preparation for an upcoming National Council on Power (NACOP) conference, Minister Adelabu stressed the need for strategic planning to ensure successful outcomes. He highlighted that it is imperative to engage all stakeholders to drive ongoing reforms in the power sector, enhancing its capacity to meet national energy demands effectively.
In conclusion, the IMF’s assessment of Nigeria’s debt as moderate presents a cautiously optimistic outlook amid ongoing economic challenges. Strategic interventions, increased domestic revenue, rigorous monetary policies, and concerted efforts in the energy sector are crucial for sustaining growth and stability. Collaborative initiatives between the government and stakeholders will be vital in ensuring Nigeria effectively navigates its economic landscape while enhancing public services and investment opportunities.
Original Source: www.arise.tv
