Nigeria’s Finance Minister: Debt Situation is Sustainable, Focus on Revenue Generation

Debt management took centre stage at the recently concluded annual meetings of the World Bank Group and the International Monetary Fund (IMF) in Marrakech, Morocco.

The meetings highlighted the global debt crisis, with a focus on its impact on low-income countries. This topic is of particular relevance to Nigeria, where concerns have been raised about the country’s reliance on external and domestic borrowing to fund budget deficits and infrastructure development.

Nigeria’s total public debt reached N87.38 trillion by the end of the second quarter of 2023, according to the Debt Management Office (DMO). This marked a 75.29% increase from the N49.85 trillion recorded at the end of March.

At the Marrakech meetings, Jubilee USA, a coalition of faith-based organisations, called on the World Bank and IMF to address the debt and food crises facing low-income nations.

They emphasised the need to stop policies that raise interest rates and advocated for development banks to include clauses in debt contracts that allow for debt payment suspensions during disasters.

They also stressed the importance of transparency and accountability in debt management.

The President of the World Bank, Ajay Banga, shared the institution’s vision of a world free of poverty and outlined key priorities, including growth, job creation, human development, fiscal and debt management, food security, and access to clean energy and water.

The Managing Director of the IMF, Kristalina Georgieva, highlighted the IMF’s collaboration with the World Bank to enhance support for low-income countries, particularly through the Poverty Reduction and Growth Trust (PRGT).

The PRGT provides zero-interest-rate loans to low-income countries, and efforts to expand its support have seen contributions from various countries.

Georgieva also emphasized the severe economic shocks experienced globally and the need for countries to address debt crises.

More than half of low-income countries remain at high risk of debt distress, while some emerging economies face “default-like spreads.”

The IMF is actively involved in mediating debt issues and providing financial support to countries during the COVID-19 pandemic.

Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, noted that Nigeria’s debt situation is sustainable and does not require restructuring.

He acknowledged that the country’s debt service-to-revenue ratio is high but emphasised the need to boost both oil and non-oil revenue.

Steps to improve revenue include engaging with oil producers to increase production, setting up a fiscal policy and tax reform committee, and attracting foreign direct investment (FDI).

The minister stressed that with these measures, Nigeria is on the path to economic recovery and increased revenue generation.

The focus on domestic revenue mobilisation is seen as crucial for the country’s long-term sustainable development.

In conclusion, addressing the global debt crisis, particularly in low-income countries, is essential to achieving sustainable development.

International finance institutions and governments must work together to provide support, enhance global liquidity, and alleviate the burden of debt on these nations.

Failure to do so could perpetuate poverty and hinder development efforts.

Source: NAN