IMF Says Nigeria Is Using More Than Half Of Its Revenue To Service Debts
For every 100 naira that the Nigerian government earns, it uses more than 50-naira to pay interest on its debts, according to the International Monetary Fund, IMF.
The IMF said this made Nigeria particularly vulnerable and puts the economy in a worse situation.
According to the Breton Woods financial institution, the fact that Nigeria spends more than 50% of its revenues on servicing debts, does not give room for other necessary expenses.
Speaking at the presentation of the Regional Economic Outlook for Sub-Saharan Africa – Capital Flows and the Future of Work in Abuja on Thursday, Senior Resident Representative and Mission Chief for Nigeria, African Department, Amine Mati, put Nigeria’s growth rate for 2018 at 1.9%.
Mati said that although Nigeria’s debt to Gross Domestic Product remained low at between 20 and 25%, the country spent a high proportion of its revenue on debt servicing as a result of low revenue generation.
For Nigeria, he added, the debt servicing to revenue ratio was more than 50% while for sub-Saharan Africa, the rate was about 10; a figure he said was too high and reminiscent of what the region went through in the period following debt relief at the beginning of the 21st century.
Mati said: “Security issues are exacting a significant human toll in a number of countries. Debt to GDP ratio is increasing in the past five years. Public debt is diverting more resources towards debt servicing.
“The interest rate has gone up to where they used to be around the year 2000 before the debt relief. The adjustment has relied on spending compression rather than revenues mobilisation. Meeting the Sustainable Development Goals will require stronger growth and more financing.”
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