From the International Monetary Fund (IMF) yesterday again came a warning on Nigeria and two other African Nations’ rising public debt stock, projecting that a whopping 60 per cent of these Countries’ revenue may be used up for debt service with only a paltry 40 per cent to contend with running of Government and service delivery.
While Nigeria’s public debt as at end September this year is put at N20 trillion, according to data by the Debt Management Office (DMO), details of the other two nations: Angola and Garbon could not be ascertained last night.
On the flip side however, the IMF yesterday commended the Central Bank of Nigeria (CBN) for sucking the foreign exchange (FX) pressure in Nigeria noting that though debt stocks have risen throughout the region, but that exchange rates pressures have eased in many countries, citing the case of Nigeria as a practical model.
Only recently at the Annual Meetings of the IMF and the World Bank in Washington in October, the two world Economic and Monetary gave the same warning to Nigeria and other Sub Saharan African countries to slow down on debt accumulation.
The yesterday’s alarm camera on the heels of the approval by the two Chambers of the Nigerian National Assembly of a new borrowing of $5.5 billion meant to restructure the country’s existing short term domestic debt as well for the implementation of the 2017 capital component of the Federal Government Budget. IMF said that public debt rose above 50 per-cent of gross domestic product (GDP) in 22 Sub-Saharan African countries at the end of 2016.
The new alarm was raised in Abuja while unveiling the report titled “Fiscal Adjustment and Economic Diversification” by the Senior Resident Representative and Mission Chief for Nigeria (Africa Department ) of IMF, Mr. Amine Mati who observed that fiscal consolidation plans needed to be implemented in the region adding that diversification offers a path to growth.
He insisted that, fiscal pressures pose risks to the weakened financial sector in Nigeria and other sub-Saharan Africa countries. The IMF pointed out that fiscal pressures pose risks to an already weakened financial sector, it said fiscal consolidation plans needed to be implemented in the region.
According to the IMF, diversification offers a path to growth, adding that the region is imbued with significant potential for raising revenues.
IMF, in its regional economic outlook which was unveiled in Abuja Thursday noted that fiscal risks are also beginning to materialize in several fast-growing non-resource intensive countries, partly reflecting security developments and a decline in cocoa prices, siting Côte d’Ivoire and fiscal slippages during election as in Ghana and Kenya.
The IMF stressed that the economies in the region are driven by large fiscal deficit and depreciation while debt stocks have risen throughout the region. The multilateral financial institutions also revealed that debt stocks have risen throughout the region while debt service costs have increased.
It pointed out that what the region required was getting the policy mix right and playing to their strengths. But the IMF noted that the region recorded a modest growth recovery but added that the recovery is not sufficient to raise the gross domestic product (GDP) per capital in many countries of the region.
The IMF also noted that growth has picked up but is set to remain subdued. While stressing that oil exporting economies like Nigeria are recovering, the IMF also noted that inflationary pressures are receding. It therefore forecast a GDP growth of 2.6 per-cent in 2017.
“Broad-based slowdown in sub-Saharan Africa is easing, but the underlying situation remains difficult. He revealed that growth is expected to pick up from 1.4 per-cent in 2016 to 2.6 per-cent in 2017, reflecting the one-off factors particularly the rebound in Nigeria’s oil and agricultural production, the easing of drought conditions that impacted much of eastern and Southern Africa in 2016 and early 2017 and a more supportive external environment”
“While 15 out of 45 countries continue to grow at 5 per-cent or faster , growth in the region as a whole will barely surpass the rate of population growth and in 12 countries, comprising over 40 per-cent of sub-saharan Africa’s population income per capita is expected to decline in 2017.
A further pick-up in growth to 3.4 per-cent is expected in 2018, but momentum is weak and growth will likely remain well below past trends in 2019. Ongoing policy uncertainty in Nigeria and South Africa continues to restrain growth in the regions two largest economies.
“Excluding these two largest economies, the average growth rate in the region is expected to be 4.4 per-cent in 2017, rising to 5.1 per-cent in 2018-19.”But even where growth remains strong, in many cases it continues to rely on public sector spending, often at the cost of rising debt and crowding out of the private sector,” the IMF said.