The International Monetary Fund (IMF) has reassured Nigerians that the country is not at risk of falling into a debt trap, describing Nigeria’s debt level as “moderate and not high risk.” Gita Gopinath, IMF’s First Deputy Managing Director, shared this assessment during an exclusive interview in Lagos, while also urging the government to intensify efforts in domestic revenue mobilisation and implement targeted social interventions. Gopinath’s comments came during a meeting with Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in Abuja. She acknowledged the economic challenges facing the country but emphasised the importance of sound fiscal policies and pro-growth measures to sustain economic stability.
In a related development, the federal government announced a historic peak power generation of 6,003 megawatts (MW), the highest ever recorded in the country. This milestone comes amid ongoing efforts to stabilise the economy and address critical infrastructure gaps. Nigeria’s total public debt rose to N142.3 trillion as of September 30, 2024, up from N134.3 trillion in June 2024, largely due to exchange rate devaluation. External debt in dollar terms increased marginally from $42.90 billion to $43.03 billion during the same period.
Gopinath explained that while Nigeria’s debt level is currently moderate, the country must avoid slipping into high-risk territory. She highlighted that 75% of government revenues are spent on interest payments, leaving little room for social support or development spending. “To ensure debt remains manageable, it is crucial to ramp up domestic revenue mobilisation,” Gopinath stated. She recommended reallocating savings from fuel subsidy removal to development projects and improving tax administration through automation and digitalisation.
Gopinath praised the Central Bank of Nigeria (CBN) for its tight monetary policy stance, which she said is essential for curbing inflation and stabilising the naira. She advised against excessive forex market interventions and stressed the need for fiscal policies that align with inflation control measures. “Maintaining high interest rates is necessary to bring inflation down, especially as food inflation is expected to soften,” she said. However, she cautioned against prematurely easing monetary policy, warning that such moves could lead to a resurgence of inflation.
During her meeting with Edun, Gopinath emphasised the need for targeted social interventions to address the high cost of living. She commended the government’s efforts to enhance social investment programmes, including the transition to a biometric-based system for improved transparency and accountability. Edun outlined the government’s progress in tax reforms, revenue assurance mechanisms, and digitalisation, which are aimed at strengthening domestic resource mobilisation. He also noted that crude oil production has increased from 1.2 million to 1.7–1.8 million barrels per day, significantly boosting national revenue.
The announcement of 6,003 MW peak power generation marks a significant achievement for Nigeria’s energy sector. The government reiterated the need for cost-reflective electricity tariffs to ensure the sustainability of the power sector and attract further investments. This milestone reflects ongoing efforts to improve infrastructure and provide stable electricity, which is critical for economic growth and development.
The IMF’s recommendations underscore the importance of maintaining fiscal discipline, enhancing revenue generation, and implementing targeted social programmes to address economic challenges. Gopinath highlighted the need for policies that improve security, power infrastructure, and ease of doing business to attract investments and stimulate growth. She also stressed the importance of closing tax loopholes and reducing exemptions to increase government revenues.
As Nigeria navigates its path to recovery, the focus remains on sustaining growth, reducing inflation, and improving the welfare of its citizens. With the IMF’s support and the government’s commitment to reforms, Nigeria aims to build a resilient economy capable of withstanding global shocks and delivering long-term prosperity. The combination of sound monetary policies, fiscal reforms, and strategic social interventions will be crucial in achieving these goals.
