Tony Chukwunyem 
…Says progress in tackling poverty in Nigeria, others, halted in 2014
The International Monetary Fund (IMF) has projected that Nigeria’s government debt-to-Gross Domestic Product (GDP) ratio will rise to 51.3 per cent this year from 46.4 per cent in 2023.
The Fund, which stated this in its October 2024 regional economic outlook for Sub-Saharan Africa, titled, “Reforms amid great expectations” presented in Lagos on Thursday, however, projected that the country’s debt-to-GDP ratio will fall to 50.0 per cent in 2025.
In its “Fiscal Monitor Report,” released last month the IMF had said that Nigeria’s debt-to- GDP ratio stood at 50.7 percent and that the figure was expected to drop slightly to 49.6 percent next year.
The Bretton Woods institution further estimated that Nigeria’s debt-to-GDP will further fall to 48.5 percent in 2026, 48.2 percent in 2027; before rising to 48.8 percent and 49.1 percent in 2028 and 2029, respectively.
The debt-to-GDP ratio measures the amount of a country’s national debt in relation to its GDP. A high debt-to-GDP ratio indicates that a country has a significant amount of debt relative to the size of its economy, while a low debt-to-GDP ratio shows that the country produces goods and services sufficient to pay back debts without incurring further debt.
Analysts note that the higher debt-to-GDP ratio projected for Nigeria this year in the IMF’s latest report, compared to the Fund’s estimate for last year, suggests that government has accumulated more debt this year.
Indeed, latest data released by the Debt Management Office (DMO) shows that Nigeria’s total public debt stock-comprising external and domestic debt of the FG, States and FCT, rose by 10.35 per cent to hit N134.30 trillion as at June 30, 2024, from N121.67 trillion as at March 31.
Meanwhile, in its analytical note for the October 2024 regional economic outlook for Sub-Saharan Africa, published on Thursday, the IMF stated that growth in sub-Saharan Africa’s Resource-Intensive Countries (RICs) and especially in fuel exporting economies such as Nigeria, Angola and Chad has slowed down sharply over the past ten years, falling far below growth in non-RICs (such as Ethiopia, Rwanda, and Senegal).
Stating that “incomes in RICs have essentially stagnated,” the Fund noted that: “This marks a sharp contrast with the decade leading up to 2014, when RICs experienced rapid growth, in line with the region’s strong overall performance.”
The IMF stressed that reversing the growth divergence between the RICs and non-RICs, “is a regional priority, as RICs make up about two-thirds of sub-Saharan Africa’s GDP and population.”
“It is also a humanitarian priority. Poor growth performance has translated into poor development outcomes progress in tackling poverty in RICs effectively halted in 2014.
“Compared to children in other parts of the region, a child born in a RIC today is expected to live 4 years less on average, and is 25 percent more likely to live in poverty,” the Washington based lender added.
The IMF attributed the post–2014 divergence between RICs and non-RICs to the dramatic decline in commodity export prices experienced by RICs around 2014–15, as well as to the fact that: “The impact of the terms-of-trade shock on RICs was exacerbated by pre-existing structural vulnerabilities, including a poor business environment, limited human capital, weak governance, and poor management of resource revenues.”
Specifically, the Fund said: “Weak governance, systemic corruption, and an unfavorable business climate take a toll on productivity and output—and the effects are most striking when commodity prices fall. Such weaknesses affect both the resource sector itself and prospects for the economy diversifying into other sectors.
“For instance, the potential for theft of oil production undermines productive efficiency and diverts precious resources from more productive uses. Or weak governance can be a central impediment for private sector investment more broadly.
“Fuel exporters outside the region, with generally stronger governance, have weathered the commodity price slump far better.
“IMF staff analysis confirms that terms-of-trade shocks have a stronger and longer-lasting impact on growth in countries with weak governance.
“We estimate that for every one-percent worsening in a country’s terms of trade, medium-term growth is around ¼ percentage point higher in countries with smaller governance challenges.”
According to the global organisation, reigniting durable growth in RICs, “Will require a stable macroeconomic environment.”
It added that: “More prudent and consistently implemented fiscal frameworks can help address poor resource management challenges and also help ensure growth is more resilient going forward.
Further, broad-based reforms to address structural weaknesses strengthening governance, enhancing the business environment, accumulating human capital, and addressing infrastructure bottlenecks can help countries diversify and grow. And for fuel exporters, facing the global green-energy transition, the need to diversify is ever more urgent.”
