Nigeria’s total debt profile, which rose to N87.4 trillion as of June 2023, is still within the moderate level of any country, according to Ari Aisen, the International Monetary Fund (IMF) Resident Representative in Nigeria. Speaking on the Arise Television Global Business Report program on Tuesday, Aisen urged Nigerians to focus more on addressing the issues driving this substantial debt situation.
The Debt Management Office (DMO), Nigeria’s debt manager, recently reported that the country’s total debt figure had increased significantly. This revelation has caused concern among Nigerians and foreigners alike, who fear that the absence of meaningful development may exacerbate the country’s current economic challenges.
Aisen emphasized that the debt-to-GDP ratio in Nigeria remains at a moderate level. He stressed the importance of implementing policies, particularly fiscal ones, to reduce the government’s financing needs. He lauded the removal of fuel subsidy as a crucial step since it accounted for 2% of GDP last year and contributed to the country’s financing needs and debt stock.
The IMF representative encouraged the new administration to concentrate more on containing government needs to prevent further escalation of the debt stock. He acknowledged that achieving President Bola Ahmed Tinubu’s GDP growth target of 7% annually might prove challenging, given the economic stress resulting from high living costs due to the removal of fuel subsidies and higher commodity prices.
However, he praised the initial reforms, such as fuel subsidy removal and exchange rate unification, indicating a move in the right direction. “These reforms need to continue to reach what we will call macroeconomic stability because if inflation can get lower and the exchange rate is more predictable, then investment can actually start coming to Nigeria,” Aisen said.
He advised that these reforms must be well managed to avoid any reversal of subsiding fuel and controlling the exchange rate. Aisen explained that these reform transitions will, in the long run, lead to a better economy. He reminded everyone that the Nigerian economy had experienced double-digit growth in the past, which could be repeated if the government maintains its appropriate policies and provides substantial support to the business sector.
“We are going to see Nigeria again double its growth rate,” Aisen confidently stated, emphasizing that a growth rate of 7% can indeed be achieved with continued reforms and support for the business sector.
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