IMF Outlines Conditions for Debt Relief for Nigeria, Ghana, and Other African Nations

The International Monetary Fund (IMF) has clarified that complete debt cancellation for countries like Nigeria, Ghana, and other African nations is not a feasible solution. The IMF’s African Department Director, Abebe Selassie, pointed out that nearly 50% of the total debts in African nations are domestic, making debt cancellations a complex undertaking.

Nigeria’s Total Debt Soars As of June 30, 2023, Nigeria’s total debt stock has surged to N87 trillion, according to the Debt Management Office (DMO).

IMF Emphasizes Tailored Solutions Abebe Selassie stressed that there is no one-size-fits-all approach to eliminate debts. Instead, he encouraged individual countries to engage in discussions with creditor nations to navigate the complexities of debt rescheduling. He asserted that tackling debts would require specific arrangements and collaboration with creditor nations to address the challenges.

Inflation Reduction Urged Selassie also urged African countries to focus on curbing inflation, as inflation rates across the continent have been gradually declining. He highlighted the importance of coordinated monetary and fiscal policies to manage inflation effectively. He noted that many nations are grappling with sustaining economic growth and creating stable employment opportunities.

IMF’s Financial Support In the past decade, the IMF has provided approximately $80 billion in emergency funding and Special Drawing Rights (SDR) allocations to African countries. As of September 2023, IMF’s SDF to Nigeria amounted to $2147.69 million, Special Drawing Rights (SDR) stood at $3363.51 million, and Quota (SDR) was $2454.5 million.

Growing Requests for Debt Cancellation Several African countries, including Nigeria, are increasingly seeking debt relief within the G24 nations. These nations have presented various proposals to the IMF and the World Bank during the ongoing IMF/World Bank meeting in Marrakesh, Morocco. The G24 members have expressed concerns about mounting public debt in developing countries, making it challenging to meet debt servicing obligations.

Efficient Debt Resolution Mechanisms Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, emphasized that the G24 statement calls for effective debt resolution mechanisms to support post-pandemic recovery. Additionally, Edun urged G20 members to eliminate export restrictions on fertilizer and grains.

Rising Debt Stock in Nigeria As per the Debt Management Office (DMO), Nigeria’s total public debt stock increased from N39.56 trillion in December 2021 to N41.60 trillion, equivalent to $100.07 billion, in the first quarter of 2022 (January to March). This expansion in the debt stock underscores the substantial contributions of various Nigerian states to the national debt.

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