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Nigeria Facing Worsening Economic Crisis – IMF

Nigeria Facing Worsening Economic Crisis - IMF
Stalled per-capita growth, poverty and high food insecurity have worsened the ongoing cost-of-living crisis in Nigeria, the International Monetary Fund  (IMF) has said amid

Gatekeepers News reports that IMF  said this in a new report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria.’

According to the report, low revenue collection has hampered the provision of services and public investment.

It noted that headline inflation reached 27 percent year-on-year in October (food inflation 32 per cent), reflecting the effects of fuel subsidy removal, exchange rate depreciation, and poor agricultural production in the country.

The report read in part, “Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation.

“Per-capita growth in Nigeria has stalled, poverty and food insecurity are high, exacerbating the cost-of-living crisis. Low reserves and very limited fiscal space constrain the authorities’ option space. Against this backdrop, the authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high and inclusive growth is appropriate.”

Amid Nigeria’s current economic difficulties, the report noted that on January 12, 2024, the International Monetary Fund Executive Board concluded the Post Financing Assessment and endorsed the Staff Appraisal on a lapse-of-time basis. It added that Nigeria’s capacity to repay the IMF is adequate.

The IMF also expressed optimism that the new administration had made a strong start, tackling deep-rooted structural issues in challenging circumstances.

Immediately, it adopted two policy reforms that its predecessors had shied away-namely fuel subsidy removal and the unification of the official exchange rates.

It added, “The new CBN team has made price stability its core mandate and demonstrated this resolve by dropping its previous role in development finance. On the fiscal side, the authorities are developing an ambitious domestic revenue mobilisation agenda.”

Nigeria currently owes the IMF the sum of $2.8bn, according to data from the Debt Management Office. The Federal Government, in its 2024 budget plans to spend about N8.2tn on debt servicing.

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