Sunday Ojeme 
The International Monetary Fund (IMF) has said that recent reforms undertaken by the Federal Government are positive towards avoiding costly debt crisis as there have not been any notable requests by a low- income country for comprehensive debt relief. The global lender in a re- port titled: “How to Ease Rising External Debt-Service Pressures in Low-Income Countries,” said despite this, vulnerabilities remain, with high debt servicing costs becoming a growing challenge for low-income countries. According to the Bretton Woods institution, “building resilience in the face of these trends requires countries to act.
“Some countries have made progress— for instance, Nigeria, Angola,The Gambia, and Zambia have taken steps to implement significant energy subsidy reforms to create space for development spending. “But many are lagging behind, especially in efforts to increase revenues, such as broadening the tax base, reducing tax exemptions, and increasing the efficien- cy of tax administration. “For instance, the typical sub-Saharan African country raised only 13 per cent of gross domestic product in revenues in 2022, compared with 18 per cent in other emerging economies and developing countries and 27 per cent in advanced economies.”
New Telegraph had reported the Debt Management Office (DMO) saying that the reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee were expected to impact debt strategy and improve debt sustainability. According to DMO, “Nigeria’s total public debt stock as at June 30, 2023, was N87.38tn ($113.42bn). It comprises the total domestic and external debts of the Federal Government of Nigeria, the 36 states, and the Federal Capital Territory.
“The major addition to the Public Debt Stock was the inclusion of the N22.712tn securitized FGN’s Ways and Means Advances.” Other additions to the debt stock were new borrowings by the Federal Government and the subnationals from local and external sources. IMF pointed out that those with high debt vulnerabilities could not afford to wait, stressing that “policy reforms are needed to boost growth and capture more revenue from that growth, for instance, through tax reforms. This will directly improve countries’ key debt metrics and ensure they can avoid a costly debt crisis. “However, reforms take time to deliver results, so countries should also proactively work on mobilising funding at lower costs, in particular grants.
“For some, this might mean turning to the IMF for help. This is indeed one of our key roles—helping countries bridge a financing gap while working with them to strengthen their policy frameworks. “Other partners, particularly MDBs or providers of ODA, may also be willing to extend financing, especially to support reforms that help address global challenges such as climate,” it said. IMF also observed that financing pressures due to relatively high interest payments and the pace at which low-income countries need to repay debt were straining budgets. That prevents these countries from spending more on essential services or the critical investment need- ed to attract business, create jobs, improve prosperity, and build climate resilience.
