The International Monetary Fund (IMF) has assured that Nigeria’s debt level remains moderate and does not pose a significant risk, despite rising concerns over the country’s economic outlook. Gita Gopinath, the IMF’s First Deputy Managing Director, provided this assessment during an exclusive interview in Lagos, where she emphasized the need for enhanced domestic revenue generation and strategic social interventions to sustain economic stability.
Gopinath’s remarks followed her meeting with Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in Abuja. Acknowledging Nigeria’s economic challenges, she underscored the importance of sound fiscal policies, effective debt management, and pro-growth measures to strengthen the country’s financial standing. While Nigeria’s total public debt climbed to N142.3 trillion as of September 30, 2024—up from N134.3 trillion in June—the IMF maintains that the debt remains within manageable limits, with external debt increasing marginally from $42.90 billion to $43.03 billion in the same period.
However, Gopinath warned that Nigeria must take proactive steps to prevent its debt from reaching high-risk levels. She highlighted that a substantial 75% of government revenue is currently allocated to interest payments, leaving limited fiscal space for essential development programs. To address this, she urged authorities to accelerate domestic revenue mobilization through improved tax administration, automation, and digitalization. Additionally, she recommended that savings from the removal of fuel subsidies be redirected toward infrastructure and social development projects.
Gopinath also praised the Central Bank of Nigeria’s (CBN) tight monetary policy stance, which she described as critical for taming inflation and stabilizing the naira. She cautioned against excessive interventions in the foreign exchange market and stressed that high interest rates should be maintained to curb inflationary pressures, particularly in the food sector. Any premature easing of monetary policies, she warned, could reverse progress and lead to inflation resurgence.
During discussions with Edun, Gopinath advocated for targeted social interventions to mitigate the impact of rising living costs on vulnerable populations. She commended Nigeria’s ongoing efforts to enhance social investment programs, particularly the shift toward a biometric-based system aimed at improving transparency and accountability in welfare distribution. Edun, in turn, outlined the government’s advancements in tax reforms and revenue assurance mechanisms, which are key to bolstering domestic resources. He also highlighted a notable increase in crude oil production, rising from 1.2 million to 1.7–1.8 million barrels per day, significantly improving national revenue inflows.
In a separate but related development, the federal government announced that Nigeria had reached a historic peak power generation level of 6,003 megawatts (MW), the highest recorded in the country’s history. This milestone reflects ongoing efforts to enhance the energy sector and address critical infrastructure deficits. The government reiterated the need for cost-reflective electricity tariffs to ensure the sustainability of power generation and attract private sector investments. Reliable electricity remains a crucial factor in boosting industrial productivity, driving economic growth, and improving living standards.
The IMF’s latest recommendations underscore the necessity of fiscal discipline, revenue expansion, and carefully structured social programs to navigate Nigeria’s economic challenges. Gopinath stressed that improving security, strengthening power infrastructure, and enhancing the ease of doing business would be key to attracting foreign investments and fostering sustainable development. She also highlighted the need for eliminating tax loopholes and reducing unnecessary exemptions to enhance government revenue.
As Nigeria continues its journey toward economic recovery, the focus remains on sustaining growth, reducing inflation, and improving the welfare of citizens. With the government’s commitment to structural reforms and the IMF’s guidance, the country aims to build a resilient economy capable of withstanding global financial shocks and ensuring long-term prosperity. By implementing sound monetary policies, strengthening fiscal discipline, and prioritizing strategic social interventions, Nigeria is positioning itself for a more stable and sustainable economic future.
