Amidst rising public debts and debt servicing burdens amongst low-income countries, including Nigeria, the International Monetary Fund, and IMF, has given general clues on what is happening in these countries while making recommendations on the way out.
Nigeria's total public debt stock, consisting of the domestic and external debt stocks of the Federal Government, 36 state governments and the Federal Capital Territory was N46.25 trillion (USD103.11 billion) at the end of December 2022. This is a 14.46 percent increase compared to N39.56 trillion (USD95.77 billion) recorded on December 31, 2021.
With the planned securitization of the N23.7 trillion CBN loan the debt stock could amount to about N77 trillion by middle of this year.
Finance Minister Zainab Ahmed, said total public debt would rise to 35.3% of GDP from 22.97% with the loan securitization.
Speaking at the on going Spring Meetings of the World Bank Group in Washington D.C. USA, yesterday, Paulo Medas, Division Chief, Fiscal Affairs Department of IMF, stated: "What we have seen in the dynamics, especially in African countries is that debt continues to rise. The problem is because the deficits remain elevated, but the other part is because interest rates are rising, and many of these countries are also recording depreciation of the currencies which also raises debt.
"So, this has intensified tax system sustainability concerns that needs to be addressed.
"At the same time, you are dealing with these very difficult conditions, including food insecurity, as there are more than 130 million people in Africa alone who are living under extreme food insecurity."
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Speaking furth er on measures to address these difficulties, Medas stated: "What we recommend in this perspective is that there is need for tight fiscal policy.
"The first set of measures should be focused on containing inflation, but the other challenge here is heightened debt sustainability concern and a lack of access to financing.
"But we need to do this in a way that protects the most vulnerable, and there are two things we see which are that tax revenues that remain low in most low-income countries in Africa. For example, tax revenues in low income countries remain five percent of GDP on average for people in emerging markets. So, there should be more efforts to increase tax capacity, create fiscal space, not only to manage the debt burdens, the rising debt burden, but also to address these other priorities to achieve the development goals.
"The other part we see is improved quality and efficiency of spending in many of these countries where you have untargeted subsidies like energy subsidies, but structuring these subsidies make it much more targeted while protecting those that are more vulnerable and this will help those who really need it and increase savings or other priorities".
