Imf warns nigeria other african peers of rising debts

The International Monetary Fund (IMF) has warned Nigeria and other African countries of the rising debt levels, which could pose a significant risk to their economic stability and growth.

According to a report by the IMF, Nigeria's debt-to-GDP ratio has risen to 22.3% in 2020, up from 17.5% in 2015. This is higher than the average debt-to-GDP ratio of 15.5% for sub-Saharan Africa.

The IMF warned that the rising debt levels in Nigeria and other African countries could lead to a debt crisis, which could have severe consequences for the economy, including:

  1. Reduced creditworthiness: High debt levels can reduce a country's creditworthiness, making it more difficult to access international capital markets.
  2. Increased risk of debt distress: High debt levels can increase the risk of debt distress, which can lead to debt restructuring or even default.
  3. Reduced fiscal space: High debt levels can reduce a country's fiscal space, making it more difficult to respond to economic shocks or implement policies to promote growth and development.
  4. Increased vulnerability to external shocks: High debt levels can make a country more vulnerable to external shocks, such as changes in global interest rates or commodity prices.

The IMF also warned that the rising debt levels in Nigeria and other African countries are driven by a combination of factors, including:

  1. Fiscal deficits: Many African countries have been running large fiscal deficits, which have contributed to the rise in debt levels.
  2. Low revenue mobilization: Many African countries have low revenue mobilization, which makes it difficult to finance public expenditure and reduce debt levels.
  3. High interest rates: High interest rates can increase the cost of borrowing and make it more difficult for countries to service their debt.
  4. External shocks: External shocks, such as changes in global interest rates or commodity prices, can also contribute to the rise in debt levels.

To address the rising debt levels, the IMF recommended that Nigeria and other African countries implement a range of policies, including:

  1. Fiscal discipline: Implementing fiscal discipline, including reducing fiscal deficits and increasing revenue mobilization, can help reduce debt levels.
  2. Debt restructuring: Restructuring debt to reduce the cost of borrowing and extend the maturity of debt can help reduce debt levels.
  3. Increasing revenue mobilization: Increasing revenue mobilization through tax reforms and other measures can help reduce debt levels.
  4. Improving public financial management: Improving public financial management, including strengthening budgeting and accounting practices, can help reduce debt levels.

Overall, the IMF's warning highlights the need for Nigeria and other African countries to take a proactive approach to managing their debt levels and implementing policies to promote sustainable economic growth and development.