…Global debt to exceed $100tr
A gradual drop in Nigeria’s debt-to-Gross Domestic Product (GDP) ratio has been projected by the International Monetary Fund (IMF).
The lender projected a drop from 50.7 percent to 49.6 percent next year.
Debt-to-GDP ratio is a metric that compares a country’s public debt to its GDP and indicates a country’s ability to pay back its debts by comparing what the nation owes with what it produces.
The higher the debt-to-GDP ratio, the less likely it becomes that the country will repay its debt and the higher its risk of default.
According to Thursday’s IMF’s ‘Fiscal Monitor Report,’ Nigeria’s debt-to-GDP figure was expected to drop slightly to 49.6 per cent next year.
The report showed that Nigeria’s debt-to-GDP ratio was 46.1 per cent in October 2023, a year after, the figure has soared to 50.7 per cent.
The IMF said Nigeria’s debt includes overdrafts from the Central Bank of Nigeria (CBN) and liabilities of the Asset Management Corporation of Nigeria (AMCON).
“The overdrafts and government deposits at the Central Bank of Nigeria almost cancel each other out, and the Asset Management Corporation of Nigeria debt is roughly halved.” IMF said.
The lender further estimated that Nigeria’s debt-to-GDP will further drop to 48.5 per cent in 2026, 48.2 percent in 2027; before rising to 48.8 per cent and 49.1 per cent in 2028 and 2029, respectively.
● Global debt to exceed $100tr
The IMF projected that global public debt will exceed $100 trillion (about 93 per cent) of global GDP by the end of the year.
The lender said: “The debt will approach 100 per cent of GDP by 2030. This is 10 percentage points of GDP above 2019, that is, before the pandemic.
“While the picture is not homogeneous – public debt is expected to stabilize or decline for two-thirds of countries – the October 2024 Fiscal Monitor shows that future debt levels could be even higher than projected, and much larger fiscal adjustments than currently projected are required to stabilize or reduce it with a high probability.”
The lender urged countries to confront debt risks now with carefully designed fiscal policies that protect growth and vulnerable households while taking advantage of the monetary policy easing cycle.
Credit: THE NATION
