The International Monetary Fund (IMF) has projected a gradual drop in Nigeria’s debt-to-Gross Domestic Product (GDP) ratio.
The lender predicted a drop from 50.7 per cent to 49.6 per cent 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 yesterday’s IMF’s ‘Fiscal Monitor Report,’ Nigeria’s debt-to-GDP figure is 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.
