The International Monetary Fund (IMF) has highlighted Nigeria’s deepening economic crisis, citing stagnant per-capita growth, widespread poverty, and heightened food insecurity as exacerbating factors amid the ongoing cost-of-living challenges.
In a recent report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria,’ the global financial institution pointed out the escalation of inflation, currency instability, sluggish economic expansion, and business closures in Nigeria.
The report underscored the impediment low revenue collection poses to service provision and public investment. It emphasized that headline inflation surged to 27 percent year-on-year in October, with food inflation peaking at 32 percent due to fuel subsidy removal, exchange rate depreciation, and subpar agricultural output.
“Nigeria confronts daunting external circumstances and a spectrum of domestic hurdles,” the report stated. “External financial resources, both from the market and official channels, are scarce, while global food prices surge due to conflict and geo-economic fragmentation.”
The IMF report continued, “Nigeria’s per-capita growth has stagnated, with high poverty and food insecurity exacerbating the cost-of-living crisis. Limited reserves and fiscal leeway restrict the authorities’ policy options. In this context, the authorities’ focus on restoring macroeconomic stability and fostering conditions for sustained, inclusive growth is warranted.”
Amid Nigeria’s economic strains, the report highlighted the IMF Executive Board’s conclusion of the Post Financing Assessment on January 12, 2024, endorsing the Staff Appraisal based on a lapse-of-time basis. It affirmed Nigeria’s adequate capacity to repay the IMF. The IMF also expressed confidence in the new administration’s proactive measures in addressing entrenched structural issues under challenging circumstances.
The report noted the adoption of two significant policy reforms by the new administration—fuel subsidy removal and unification of official exchange rates. It commended the Central Bank of Nigeria’s renewed emphasis on price stability and its withdrawal from development finance, alongside the government’s ambitious domestic revenue mobilization agenda.
According to data from the Debt Management Office, Nigeria’s debt to the IMF stands at $2.8 billion. The Federal Government’s 2024 budget earmarks approximately N8.2 trillion for debt servicing.
In a fresh report, professional services firm PricewaterhouseCoopers cautioned that Nigeria’s escalating debt service costs could impact its debt servicing capacity, credit rating outlook, and borrowing costs. PwC projected a rise in debt service from N8.25 trillion in 2024 to N9.3 trillion in 2025, escalating further to N11.1 trillion in 2026.
Source: Punch NG