New Telegraph

IMF: Nigeria’s debt-to-GDP remains relatively low

Compared to other low-income countries, Nigeria’s debt to Gross Domestic Product (debt-to- GDP) ratio is relatively on the low side, the International Monetary Fund (IMF) has said. The Head of the World Economic Studies Division in the Research Department of IMF, Malhar Nabar, stated this while responding to a question on Nigeria during the press briefing on the Fund’s latest World Economic Outlook (WEO). Specifically, the questioner had wanted to know the IMF’s reaction to the Federal Government’s U-turn over theemroval of fuel subsidy and the Fund’s assessment of the state of Nigeria’s debts given that the Bretton Woods institution hasexpressedconcern that the imminent monetary tightening in advanced economies could push some lowincome countries into debt distress.

Responding, Nabar said: “In terms of the subsidies, we have for long, not just for Nigeria, but for many low-income countries that have these subsidy schemes in place, we have called for scaling back poorly targeted subsidies to create fiscal space that can then be repurposed for meeting vital health and social spending needs and that recommendation applies in the case of Nigeria too. “In terms of the debt situation, among low-income countries, Nigeria actually has – in terms of its public debt – the GDP ratio, its actually relatively on the low side compared to other lowincome countries. So, going forward, that is certainly providing a little bit more space to provide the needed support for combating the health emergency, and also putting Nigeria on the path to a sustainable recovery.”

Earlier, First Acting Managing Director at IMF, Gita Gopinath, had said that with monetary stance tightening more broadly this year, economies will need to adapt to a global environment of higher interest rates, adding that “emerging market and developing economies with large foreign currency borrowing and external financing needs should prepare for possible turbulence in financial markets by extending debt maturities as feasible and containing currency mismatches.” She further stated: “Exchange range flexibility can help with needed macroeconomic adjustment. In some cases, foreign exchange intervention and temporary capitalflowmeasuresmaybe needed to provide monetary policy with the space to focus on domestic conditions

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