The International Monetary Fund (IMF) has dismissed the possibility of total debt cancellation for Nigeria, Ghana, and other African economies.
Speaking during the African Session, at the ongoing IMF/World Bank Annual Meetings, in Marrakech, Morocco, IMF African Department Director, Abebe Selassie said 50 percent of total debts in sub-Saharan countries are domestic, making debt forgiveness difficult.
Recall that the Debt Management Office (DMO) data showed that Nigeria has a total debt stock of $113.4 billion as of June 30, 2023.
Selassie, who spoke on the theme: “In Pursuit of Stronger Growth and Resilience”, said there is no super magic to wave and get rid of debts, adding that there should be country-specific dialogue on how to reschedule the debts. He added that how the debts will be handed boils down to discussing with creditor nations on the way out of the crisis.
Selassie said where there is a rise in private investment and consumption, it is expected to lift growth in many parts of the region by 2024. He said growth in the region was greatly subdued, adding that inflation is gradually dropping.
According to him, inflation remains too high in many countries, saying monetary and fiscal policies should work together to keep it under check, adding that too many countries are struggling to maintain growth and have sustainable jobs.
The IMF said it has loaned $80 billion between 2020; and today, to sub-Saharan African economies for emergency funding and Special Drawing Rights (SDR) allocations.
Also speaking at the opening press conference, World Bank Group president, Ajay Banga, said interest rates will stay higher for longer, likely complicating investments across the world. He said resigning inflation has caused many central banks to keep monetary policy rates higher than anticipated.
The Central Bank of Nigeria (CBN) and other central banks in many parts of the world kept raising interest rates in order to tackle elevated inflation.
World Bank’s Chief Economist, Indermit Gill, said the Bank expects the impact of interest-rate tightening to be felt beyond the next couple of years, and countries with high bilateral/multilateral debt to face further challenges, including bankruptcy.
