IMF ranks Nigeria among countries with low debt-to-GDP ratio
The International Monetary Fund has ranked Nigeria among the countries in Africa with low debt compared to its GDP.
Nigeria with a debt-to-GDP ratio of 41.3 percent is ranked second on the list of least indebted countries on the continent despite cries about its bloated debt servicing.
According to the IMF, the country has about 41.3 percent debt to GDP, and its diverse economic sectors and efforts to manage its debts contribute to its position among the least indebted nations.
The latest report which said about 10 African countries still have manageable debts compared to their GDP, is coming at a time Nigerians are calling for the country to tame its appetite for borrowing.
Nigeria’s current debt profile recently hit N87 trillion, with the Federal Government saying it will convert the Central Bank of Nigeria’s Ways and Means Advances to loans.
Just recently, ex-president Olusegun Obasanjo raised the alarm that African countries face challenges in obtaining debt relief due to mismanagement of resources.
He stressed the need for careful leadership, warning against debt trap, and encouraging qualities such as setting examples and decision-making for effective leadership.
Debt-to-GDP is a critical metric that compares a country’s total debt to its economic output.
Lower ratios show financial stability and higher ratios indicate potential challenges in fulfilling debt obligations, which attract global investors, and interest rates on government bonds.
Other countries listed by the IMF are Cameroon. The Central African country’s debt-to-GDP of 39.6 percent demonstrates Cameroon’s commitment to keeping a fiscal discipline. The country has maintained strict control over government expenditures and prudent handling of oil revenue, critical resources, and others, which have aided its budgetary stability.
With a 38.7 percent debt-to-GDP ratio, Chad reflects a balanced approach to managing financial obligations with its 38.7% debt-to-GDP after emerging from years of internal war. The country’s debt restructuring initiatives and transparency have been critical in keeping its debt profile low. Comoros: 36.9% debt-to-GDP ratio the country shows prudent fiscal discipline with a debt-to-GDP ratio of 36.9%, an example of a nation’s debt management.
Nigeria’s debt hit a new record, surpassing an eightfold increase in the last 10 years. The substantial growth became evident considering the inclusion of the CBN loan recently authorised by President Bola Tinubu.
The President had earlier asked the Senate to approve his proposal to securitise the outstanding N7.3 trillion Ways and Means which the Senate obliged.