Nigeria’s economic crisis intensifies, IMF reports

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The International Monetary Fund (IMF) has stated that the ongoing cost-of-living crisis in Nigeria has spiked due to stalled per-capita growth, high poverty rates, and increased food insecurity.

  • Nigeria faces a difficult external environment and wide-ranging domestic challenges.
  • Low revenue collection has hindered the government’s ability to provide services and make public investments.
  • Nigera’s growth is projected at 3 per cent in 2024, as hydrocarbon performance revives, including from better control of theft.

This was revealed in its recent report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria.’

The international lender points out that low revenue collection has hindered the government’s ability to provide services and make public investments.

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The report noted that headline inflation in Nigeria spiked to 27 per cent year-on-year in October, with food inflation reaching 32 per cent. This surge has been attributed to the impacts of fuel subsidy removal, exchange rate depreciation, and challenges in agricultural production within the country.

Latest estimates show 25 million (13 per cent of the population) as food insecure. The poverty rate was 37 per cent in 2022.

What the report said:

“Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation,”

Per-capita growth in Nigeria has stalled, poverty and food insecurity are high, exacerbating the cost-of-living crisis. Low reserves and very limited fiscal space constrain the authorities’ option space. Against this backdrop, the authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high and inclusive growth is appropriate.”

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The report revealed that amidst Nigeria’s economic challenges, the Executive Board of the International Monetary Fund concluded the Post Financing Assessment on January 12, 2024.

The Board endorsed the Staff Appraisal on a lapse-of-time basis, indicating that Nigeria’s capacity to repay the IMF is deemed adequate.

Data from the Debt Management Office reveals that Nigeria’s current debt to the IMF stands at $2.8 billion. In the 2024 budget, the Federal Government plans to allocate approximately N8.2 trillion for debt servicing.

Growth outlook

Growth is projected at 2.9 per cent for 2023, and 3 per cent in 2024, as hydrocarbon performance revives, including from better control of theft.

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The IMF says if the authorities succeed in developing and implementing a comprehensive reform agenda, the medium-term outlook will be much improved

The IMF also expressed optimism that the new administration had made a strong start, tackling deep-rooted structural issues in challenging circumstances.

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