BREAKING: IMF Speaks On Debt Cancellation For Nigeria (DETAILS)

BREAKING: IMF Speaks On Debt Cancellation For Nigeria (DETAILS)

The International Monetary Fund (IMF) has ruled out the possibility of a complete debt cancellation for African countries like Nigeria and Ghana.

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The IMF’s African Department Director, Abebe Selassie, explained during the ongoing IMF/World Bank Annual Meetings in Marrakech, Morocco, that half of the total debts in Sub-Saharan African countries are domestic, which makes complete debt forgiveness challenging.

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As of June 30, 2023, Nigeria’s total debt stock stands at $113.4 billion according to data from the Debt Management Office (DMO).

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Selassie emphasized that there’s no one-size-fits-all solution for eliminating debts and suggested that a country-specific dialogue on debt rescheduling is necessary. The approach to handling these debts will require discussions with creditor nations to find a way out of the crisis.

Selassie noted that an increase in private investment and consumption is expected to boost growth in many parts of the region by 2024. He acknowledged that while inflation is gradually decreasing, it remains too high in many countries. Selassie recommended that monetary and fiscal policies should work together to keep inflation in check.

The IMF disclosed that it has provided $80 billion in emergency funding and Special Drawing Rights (SDR) allocations to Sub-Saharan African economies between 2020 and the present.

World Bank Group president, Ajay Banga, also shared that interest rates are expected to stay elevated for an extended period, which could complicate investments globally. Central banks in various parts of the world, including the Central Bank of Nigeria (CBN), have been raising interest rates to combat high inflation.

World Bank’s Chief Economist, Indermit Gill, highlighted that countries like the US and India are positive aspects in the global economy, which is experiencing a slowdown. The agency anticipates that advanced economies will grow at rates of 1.5% and 1.4% in 2023 and 2024, respectively.

Gill indicated that the impact of interest rate tightening will extend beyond the next couple of years. He also pointed out that countries with high levels of bilateral/multilateral debt will face additional challenges, potentially leading to insolvency.

Banga outlined measures to enhance the World Bank’s capacity, aiming for an incremental lending capacity of $150 billion over the next decade. This includes contributions from donors and initiatives like portfolio guarantees and hybrid capital.

The World Bank, under Banga’s leadership, is focused on addressing the triple challenges of the pandemic, climate change, and food insecurity.

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