The IMF Senior Resident Representative and Mission Chief for Nigeria, Mr Amine Mati has said Nigeria’s debt to GDP ratio which the IMF projects to be at 28 percent, has increased but still below the average in sub-Saharan Africa and Africa.
He said this at the public presentation of the Fall 2019 issue of the Regional Economic Outlook for Sub-Saharan Africa in Lagos yesterday.
Mati also said the revenue to GDP is low and urged the federal government to increase its drive to create more new jobs and revamp its fiscal consolidation.
He said: “Nigeria debt has increased but the level is way below the average for the region. Even if we include the CBN overdraft and others we are talking about a debt to GDP ratio that doesn’t go beyond 27 to 28 percent to GDP and that is including AMCON overdrafts etcetera.”
On fiscal consolidation, he said: “For resource intensive countries and the non-resource intensive countries, one thing that is common is that when there is trade shock, they had to react. So, you lose revenues, debt go up.”
He said the three largest countries that are driving Sub Saharan growth are Angola, South Africa and Nigeria. Angola has a negative growth; South Africa has a growth below one percent and Nigeria is growing between two and 2.5 percent which is still on the negative per capita growth.
“Nigeria is still on 2.3 percent for 2019 but for 2020 we project a growth of 2.5 percent, so it is still not growing as fast as the others for a variety of reasons including some of the structural reforms and others but it is picking up,” Mati said.
On what would affect Nigeria’s outlook, he said it would be mostly affected by external factors. He said: “With the trade tensions between America and China, export growth of the region has gone down. And the volume of trade for the region as a whole and globally has gone down almost to zero. So whatever happens externally will also impact Africa. The demand is down but for countries like Nigeria that depend on natural resources, lower demand for oil would impact on the price also.”
Furthermore he added that there is need for African countries to priorities job creation. “20 million people would be joining the job market in sub Saharan Africa. And these are new jobs that need to be created through structural reforms and whatever reforms are being pursued.”
Reacting to the report, the Managing Director, Financial Derivatives Company/ Member, President’s Economic Advisory Council, Mr Bismarck Rewane said: “We don’t have a debt crisis, we have a revenue problem but there are also other problems such as poverty, productivity. So it is not if we have a debt or revenue problem. Also, what we use our revenue for is also important.
“So the Government expenditure and the government investment multiplier is much lower than the private sector multiplier and the difference between the flow of wealth and the stock of wealth is a different story.”