The International Monetary Fund (IMF) said that Nigeria’s total debt profile of over N87 trillion is still within the moderate level of any country, urging Nigerians to focus more on dealing with the issues driving this huge debt situation.
Ari Aisen, IMF Resident Representative in Nigeria, made this remark on Tuesday when he appeared as a guest on the Arise Television Global Business Report programme.
The Debt Management Office (DMO), Nigeria’s debt manager, said in its recent report that the country’s total debt figure rose to N87.4 trillion as of June 2023—a situation that has caused worry among Nigerians and foreigners alike—fearing that an absence of any meaningful development may be on the table for the country as it struggles with its present economic woes.
Read also: Reforms in Nigeria, others can reduce debt, boost growth; IMF
“As for now, the debt-to-GDP ratio is still at a moderate level in Nigeria. It is very important that policies are put in place, particularly fiscal policies, to reduce the financing needs of the government,” Aisen said.
“The removal of fuel subsidy was a very important step because fuel subsidy cost 2 percent of GDP last year and were adding to the financing needs and the stock of debt of the country.”
He urged that this new administration focus more on containing the needs of the government so that the debt stock does not rise any further.
Meanwhile, on President Bola Ahmed Tinubu’s GDP growth target of 7 percent annually, Aisen admitted that achieving that growth target may be very challenging, especially as the economy continues to face so much stress as a result of high living costs caused by the removal of fuel subsidy and higher prices of commodities.
“But we are in a transition period, and the initial move of the reforms shows that we are in the right direction. The removal of fuel subsidy and the unification of exchange rates,” he praised.
“These reforms need to continue to reach what we will call macroeconomic stability because if inflation can get lower and the exchange rate is more predictable, then investment can actually start coming to Nigeria.”
He advised that the reforms have to be well managed to avoid any reversal of subsiding fuel and controlling the exchange rate.
He explained that these reform transitions will, in the long run, lead to a better economy. Aisan reminded all that the Nigerian economy has in the past grown into double digits, and such growth can be repeated if the government continues with its right policies and provides a lot of support to the business sector. Growth of 7 percent can be achieved, he emphasised.
“We are going to see Nigeria again double its growth rate,” the IMF representative said.
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