The International Monetary Fund, IMF, has warned Nigeria and some African economies to check rising levels of debts, urging them to diversify their revenue bases or face crisis.
Maurice Obstfeld, the Economic Counsellor of IMF, who disclosed this on Tuesday in Indonesia, advised the country to guard against the temptation of letting higher oil prices delay reforms, warning that oil prices are projected to remain below the 2013 peak.
As at June 30, 2018, Nigeria’s debt profile was N22.3 trillion.
Though, Obstfeld admitted growth rebound in Nigeria and other African nations, he added that the trend would be buoyed by the impact of recovering oil production and prices.
Nigeria’s growth is projected to increase from 0.8 per cent in 2017 to 1.9 per cent in 2018 and 2.3 per cent in 2019, 0.4 percentage point higher than the April 2018 forecast.
On the rising obligations of the sub-region’s economies, Obstfeld pointed out that strengthening fiscal positions was necessary to reduce debt vulnerabilities.
“Boosting non-oil revenues and continuing fiscal consolidation plans remain key goals for oil exporters.
The focus should be on growth-friendly fiscal adjustment, with a shift in spending toward productive and social outlays accompanied by effective domestic revenue mobilisation, broadening of tax base and strengthening of revenue administration.
“Moreover, enhancing financial resilience through proactive banking supervision, ensuring adequate provisioning for losses by banks and improving resolution frameworks to keep expensive public bailouts at bay can help foster a financial system supportive of growth.”
The IMF report also warned that most countries must build fiscal buffers to make room for policy responses to the “next recession” and reduce the long-term costs of servicing high public debts.