IMF Warns Nigeria on Increasing Debts as Fuel Subsidy Climbs to N6tn Annually
PMB
The International Monetary Fund (IMF) on Monday warned that the fuel subsidy may be heading to N6trillion yearly with monthly payment of N500bn.
This was as the Fund also said a macro-fiscal stress test it carried out revealed that the continued servicing of debts may lead to using 100 percent of its revenue on this exercise in the next four years.
IMF’s Resident Representative for Nigeria, Mr. Ari Aisen who presented an outlook on the Sub-Saharan Africa Regional Economic Outlook, in Abuja said Nigeria has been receiving loans since 2019.
For instance, Aisen said Nigeria received the total sum of $6.8bn from IMF during the COVID-19 outbreak in 2020, another $3.4bn in Special Drawing Rights (SDR) and a loan in the same amount.
He said this worrisome as Nigeria and many other African countries could slide into critical debt servicing problem.
According to him, 80 percent of revenue was currently committed to servicing of debts.
He said this was simply “a reflection of low revenue. It is an existential issue for Nigeria. It is essential for macro-economic stability. It is important for the provision for social service”.
He added, “I think the biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue almost 100 per cent is projected by 2026 to be taken by debt service.
“So, the fiscal space or the amount of revenues that will be needed and this without considering any shock is that most of the revenues of the federal government are now in fact 89 per cent and it will continue if nothing is done to be taken by debt service.
“It is a reflection of the low revenue of the country. The country needs to mobilise more revenue to be able to have macroeconomic stability. It has become an existential issue for Nigeria.
“The war in Europe is hunger in Sub-Saharan Africa and Africa. So, I think we should pay very close attention to this issue.”
“In Sub Saharan Africa, Russia and Ukraine are first and the fifth major sources of wheat imports to Sub-Saharan Africa.
“So clearly having this conflict is the epicenter of the wheat-producing countries being hurt, which puts as we said, a big premium on the price of wheat. And it is especially complicated in Sub-Saharan Africa where we have 57 per cent of the population on moderate or severe food insecurity and this is extremely concerning for the IMF because after two years of the pandemic on top of these people already suffering, you have this extra shock affecting the price of basic food items in an already very vulnerable population is something of great concern to us.”
This was as the Fund also said a macro-fiscal stress test it carried out revealed that the continued servicing of debts may lead to using 100 percent of its revenue on this exercise in the next four years.
IMF’s Resident Representative for Nigeria, Mr. Ari Aisen who presented an outlook on the Sub-Saharan Africa Regional Economic Outlook, in Abuja said Nigeria has been receiving loans since 2019.
For instance, Aisen said Nigeria received the total sum of $6.8bn from IMF during the COVID-19 outbreak in 2020, another $3.4bn in Special Drawing Rights (SDR) and a loan in the same amount.
He said this worrisome as Nigeria and many other African countries could slide into critical debt servicing problem.
According to him, 80 percent of revenue was currently committed to servicing of debts.
He said this was simply “a reflection of low revenue. It is an existential issue for Nigeria. It is essential for macro-economic stability. It is important for the provision for social service”.
He added, “I think the biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue almost 100 per cent is projected by 2026 to be taken by debt service.
“So, the fiscal space or the amount of revenues that will be needed and this without considering any shock is that most of the revenues of the federal government are now in fact 89 per cent and it will continue if nothing is done to be taken by debt service.
“It is a reflection of the low revenue of the country. The country needs to mobilise more revenue to be able to have macroeconomic stability. It has become an existential issue for Nigeria.
“The war in Europe is hunger in Sub-Saharan Africa and Africa. So, I think we should pay very close attention to this issue.”
“In Sub Saharan Africa, Russia and Ukraine are first and the fifth major sources of wheat imports to Sub-Saharan Africa.
“So clearly having this conflict is the epicenter of the wheat-producing countries being hurt, which puts as we said, a big premium on the price of wheat. And it is especially complicated in Sub-Saharan Africa where we have 57 per cent of the population on moderate or severe food insecurity and this is extremely concerning for the IMF because after two years of the pandemic on top of these people already suffering, you have this extra shock affecting the price of basic food items in an already very vulnerable population is something of great concern to us.”
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