Emmanuel OchayiThe International Monetary Fund (IMF) sheds light on the concerning fiscal landscape faced by low-income countries, highlighting Nigeria’s growing debt burden.
Despite no requests for debt relief, the IMF acknowledges the persistent challenge of high debt servicing costs.
Join our WhatsApp ChannelCommending Nigeria and three other nations for subsidy reforms aimed at fostering development, the IMF expresses worry about widespread lag in revenue-generation efforts. Sub-Saharan African countries, for instance, trail in revenue collection, raising only 13% of GDP in 2022 compared to 27% in advanced economies.
“Building resilience in the face of these trends requires countries to act,” emphasizes the IMF. While some nations like Angola, The Gambia, Nigeria, and Zambia have implemented energy subsidy reforms, others are falling behind in essential policy reforms such as broadening tax bases and improving tax administration efficiency.
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The report underscores the urgency for policy reforms to boost growth and increase revenue, with a warning against delay.
Nigeria, grappling with a public debt of N87.91 trillion, plans to spend N8.25 trillion on debt servicing in 2024, drawing criticism from experts. The World Bank cautions that without drastic reforms, Nigeria’s debt service-to-revenue ratio could soar to 160% by 2027.
The IMF points out that financing pressures, driven by high-interest payments and accelerated debt repayment schedules, hinder low-income countries from allocating resources to essential services and vital investments. The report emphasizes the need for tax reforms to capture more revenue from economic growth, preventing a costly debt crisis.
As the global economic tightrope becomes increasingly precarious, the IMF’s call for urgent action echoes, urging nations to navigate the challenges with policy reforms to ensure economic stability and resilience.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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