He, however, expressed optimism that the Dangote Refinery would reduce fuel importation when completed, in order to reduce the subsidy burden.
The IMF Rep explained that Nigeria received $3. 4 billion in Special Drawing Rights and and an equal amount in addition as loan from the Fund, bringing the total loan since 2020 to $6.8 billion.
He expressed concerns that many African countries, including Nigeria, would face a critical problem with debt servicing unless actions were immediately taken to significantly raise revenue.
According to him, over 80 per cent of federal government revenue is going into debt servicing.
While describing this as an “existential problem.”, the IMF Rep said: “It is a reflection of low revenue; it is an existential issue for Nigeria. It is essential for macro-economic stability. It is important for the provision for social service.”
He flayed the Nigerian economic situation which, as an oil exporter, was not only able to take advantage of the current high oil prices of crude to build reserves but also faced low earnings due to the petroleum products subsidy.
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On the economic outlook for the continent, Mr. Aisen identified key priority areas to include how to reduce debt vulnerabilities; balance inflation and growth; and manage foreign exchange rate pressures.
He said with, “unrivalled potential for renewable energy and an abundance of minerals, a successful transition offers opportunities for diversification and job creation; ensuring the green transition is also a just transition.”
The IMF Representative said fragile and conflict-affected African countries were at the risk of falling further behind in terms of development, especially now that the world economy was faced with an unprecedentedly high energy and food prices.
According to him, the Fund has done a lot to help African countries, South of the Sahara, having given them $23 billion Special Drawing Rights allocation and planning to re-channel additional $100 billion SDR from developed countries.
He said Africa needed $425 billion to recover from the COVID-19 pandemic, in addition to $30–50 billion per year for climate adaptation and $ 6-10 billion annually for commodity import.
In his remarks, the Director-General of the Budget Office, Mr. Ben Akabueze, disagreed with Mr. Aisen on his debt service/revenue figures.
According to him, debt service/revenue is 76 per cent but admitted that even at that level, it is way far too high.
“There is no doubt that the debt servicing revenue is way beyond what we want it to be,” adding that the federal government had taken steps to significantly increase revenue.
He added that additional revenue was the only choice before the government but assured that the nation would not default in its debt servicing obligations, having made it a priority.
Akabueze regretted that vested interests had made the removal of petrol subsidy very difficult over the years.
“When you try to remove subsidy or raise tariffs, you get summons, you see resolutions get passed, asking you not to,” he said.
He said that when the executive prepared the 2022 budget, it was with the understanding that petrol subsidy would be removed but noted that somehow, that move was frustrated.
In his contribution, the Director of Policy at the Central Bank of Nigeria, Dr. Hassan Mahmoud, explained that the Monetary Policy Rate, MPR, was recently raised in order to ensure an environment in which the nation could still attract investors and prevent capital outflows that could hurt the economy.
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