IMF casts doubt on Nigeria’s capacity to repay loans

The International Monetary Fund (IMF) says Nigeria’s debt stock might be low but it doubts the country’s capacity to repay the debts.

Speaking on Monday at the public presentation of Spring 2018 Regional Economic Outlook for Sub-Saharan Africa, the IMF said the country has to increase domestic revenue.

“The number of countries in debt distress has increased. From six countries in 2014 to eight in 2015, to 10 in 2016, and today 15 countries. These are low-income economies,” said Amine Mati, IMF senior resident representative and mission chief to Nigeria.

“Now, I know the question that is going to come from here is: Where is Nigeria? Nigeria is not considered a low-income economy. Nigeria’s debt stock figure, which is 20 to 23 percent of gross domestic product, is still quite low by any standard. The issue is capacity to repay the debts. So, interest payment to revenue is an issue.

“There is a lot that can be done to increase revenue very quickly. If you look at all the various forms of taxation, you can take another look of property tax, then you can have tax administration and improving compliance. You know, in Nigeria, complying with many of the taxes is still very low.

“We think that for the region, there needs to be three to five percent GDP growth is needed. How do you get there? In Nigeria you can remove a lot of exemptions and expand income taxes.

“Those are the types of measures that, as part of a comprehensive package, can make the difference in increasing revenue mobilisation.”