Our Terms & Conditions | Our Privacy Policy
Nigeria’s engagement with the global debt market remains vibrant despite challenges posed by high borrowing costs, the International Monetary Fund has said.
During a press conference on the global financial stability report at the IMF/World Bank annual meetings in Washington DC, the IMF’s Financial Counsellor and Director of Monetary and Capital Markets, Tobias Adrian, said that Nigeria and other frontier markets have maintained significant activity in the debt market throughout 2024, even though financing costs have surged compared to pre-2021 levels.
He said, “Frontier markets, including Nigeria, have been active in the debt market this year, and though access to financing is still more expensive than before, the overall issuance levels have been encouraging.”
However, the IMF expressed support for Nigeria’s recent monetary policy measures, particularly the Central Bank of Nigeria’s interest rate hikes and foreign exchange reforms, which have been designed to stabilise the economy.
Adrian noted that the CBN’s shift toward inflation targeting and its efforts to liberalise the exchange rate has been crucial in addressing inflation, which remains close to 30 per cent.
Adrian further stressed the importance of these reforms, particularly given the inflationary pressures compounded by recent natural disasters, such as floods, which have worsened living conditions for many Nigerians.
The IMF also revised its economic forecast for Nigeria, projecting a slowdown in the country’s growth for 2024.
According to the latest World Economic Outlook report released on Tuesday, Nigeria’s economy is now expected to grow at 2.9 per cent in 2024, maintaining the same growth pace recorded in 2023.
The latest projection is a 0.2 per cent decrease from the previous projection in July and 0.4 per cent decrease from the previous projection in April.
This adjustment reflects the IMF’s cautious stance on the challenges facing emerging markets, including Nigeria.
The international lender noted that “the revision reflects slower growth in Nigeria, amid weaker-than-expected activity in the first half of the year.”
Also, the Deputy Chief of the IMF’s Research Department, Jean-Marc Natal, elaborated on Nigeria’s growth challenges, highlighting disruptions in agriculture and oil production as key factors behind the revised growth forecast.
He said, “We revised growth for Nigeria 2024 by 0.2 per cent down. Things are volatile because the reason for the revision is precisely issues in agriculture related to flooding and issues in the production of oil, related to security and maintenance that have pushed down the production of oil. So, these two factors have played a role.”
However, the IMF also noted that the projected growth for 2025 stands at 3.2 per cent, which is 0.2 per cent higher than the projections made in July and April this year.
The IMF’s projection is much lower than that of the World Bank for 2024 and 2025.
In the latest edition of Africa’s Pulse, a recent report by the World Bank, it was projected that Nigeria’s Gross Domestic Product will expand by 3.3 per cent in 2024 and slightly accelerate to 3.6 per cent in 2025-2026.
Concessional loans
The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, also held strategic meetings with IMF Managing Director Kristalina Georgieva during the annual conference.
In a statement from the ministry on Tuesday, discussions centred on Nigeria’s economic growth prospects and the progress made under President Bola Tinubu’s reform agenda.
The statement read, “Leading Nigeria’s delegation, Edun will be at the forefront of discussions on strengthening Nigeria’s economic resilience, particularly amid the nation’s ongoing structural reforms.
“He is expected to make a case for increased international support to ensure the success of these domestic initiatives, emphasising that access to adequate and affordable financing is critical to maximising the benefits of the country’s economic adjustments.”
During the G-24 leaders’ news conference during IMF-World Bank meetings on Tuesday, Edun advocated for concessional loans from the IMF and World Bank for Nigeria and other countries undertaking economic reforms.
He said, “The issue that we are contending with in Africa is that in many ways we are bystanders to this all-important election. Yes, we do have the African Growth and Opportunities Act which tries to open up the US market to African-manufactured products, I don’t think that will be affected in any way by the result of this election.
“And generally, what we are finding is that at this particular time, the economies of trade generally, there is a reversal of globalisation of trade, there is a move to protectionism in these countries, there is the onboarding of production and all these things tend to work against the developing world’s ability to benefit from expanding trade.
“And thereby use that opportunity for investment for growth and job creation and poverty reduction. So, overall, I think that we are not that affected specifically but that in general, we continue to ask for an improved global financial architecture that provides us with more concessional funding at scale, particularly for those countries that are undertaking the macro-economic reforms that everybody agrees are sensible and will lead to better lives for their people.”
Edun noted that these loans are crucial for supporting reform programs aimed at achieving macroeconomic sustainability while cushioning the poor and vulnerable from the upfront costs of adjustment policies.
He said, “When we talk about debt sustainability and reform generally, the requirement for support from the international community, from the development partners, from the multilateral development banks is that you undertake reforms that lead to sustainability at the macro level.
“The key lesson that I think I would focus on is that in devising these programmes and carrying out all the reforms, what is particularly important because the benefits over the longer term and the costs are front-loaded, it is important that the social safety net that will help the poor and the vulnerable cope with the upfront cost in the spike in the cost of living is adequately planned for and dealt with.
“Linked to that focus on helping the poor and the most vulnerable is communication. I think one of the critical things in carrying out these macroeconomic reforms that are so fundamental is communicating what is being done, what is to be expected and the timing as much as possible and then communicating what has been done.”
The statement from the finance ministry also noted that the CBN, led by Governor Yemi Cardoso, is expected to hold a session titled Strengthening Ties with Nigerians Abroad. This discussion aims to explore how the Nigerian diaspora can contribute to boosting remittance inflows, which are essential for maintaining foreign exchange reserves amid fiscal challenges.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.