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The International Monetary Fund (IMF) reported that Nigeria’s activity in the global debt market is still robust, despite the hurdles presented by rising borrowing costs. This ongoing engagement reflects the nation’s determination to secure funding and maintain financial stability in a fluctuating economic environment.
At a press conference during the IMF/World Bank annual meetings in Washington, DC, where the global financial stability report was presented, Tobias Adrian, the IMF’s Financial Counsellor and Director of Monetary and Capital Markets, stated that Nigeria and other frontier markets have maintained robust activity in the debt market in 2024. This is particularly remarkable given that financing costs have risen dramatically since pre-2021, underscoring the resilience of these economies.
He said, “Frontier markets, including Nigeria, have been active in the debt market this year, and though access to financing is still more expensive than before, the overall issuance levels have been encouraging.”
The IMF has expressed favorable views on Nigeria’s recent monetary policy measures, especially regarding the Central Bank of Nigeria’s interest rate hikes and foreign exchange reforms. These initiatives are intended to stabilize the economy and mitigate the impacts of inflation, demonstrating a commitment to sound economic management during turbulent times.
Adrian pointed out that the CBN’s shift towards an inflation-targeting regime, along with its efforts to liberalize the exchange rate, has been crucial in addressing the inflation challenge, which is currently nearing 30 percent. This strategy aims to create a more stable economic framework and mitigate the adverse effects of soaring prices on consumers.
Adrian highlighted the necessity of these reforms, especially due to the inflationary pressures intensified by recent natural disasters, including floods that have critically worsened the living conditions for many Nigerians. Such challenges make it imperative for policymakers to prioritize effective measures that can mitigate these impacts.
The IMF also revised its economic forecast for Nigeria, projecting a slowdown in the country’s growth for 2024
According to the latest World Economic Outlook report released on Tuesday, Nigeria’s economy is now expected to grow at 2.9 per cent in 2024, maintaining the same growth pace recorded in 2023.
The latest projection is a 0.2 per cent decrease from the previous projection in July and 0.4 per cent decrease from the previous projection in April.
This adjustment reflects the IMF’s cautious stance on the challenges facing emerging markets, including Nigeria.
The international lender noted that “the revision reflects slower growth in Nigeria, amid weaker-than-expected activity in the first half of the year.”
Also, the Deputy Chief of the IMF’s Research Department, Jean-Marc Natal, elaborated on Nigeria’s growth challenges, highlighting disruptions in agriculture and oil production as key factors behind the revised growth forecast.
Read also: IMF: Global Public Debt To Surpass $100 Trillion In 2024
He said, “We revised growth for Nigeria 2024 by 0.2 per cent down. Things are volatile because the reason for the revision is precisely issues in agriculture related to flooding and issues in the production of oil, related to security and maintenance that have pushed down the production of oil. So, these two factors have played a role.”
Adrian reiterated the importance of these reforms, particularly in the context of inflationary pressures intensified by recent natural disasters, like floods, which have further strained the living conditions for a substantial number of Nigerians. These circumstances accentuate the need for timely interventions to help communities recover and thrive.
The IMF’s outlook is much more conservative compared to the World Bank’s projections for 2024 and 2025, emphasizing the challenges that may hinder economic growth. This difference illustrates the varied expectations of global economic conditions, which can affect funding and investment strategies in emerging markets.
The most recent edition of Africa’s Pulse, a report by the World Bank, indicates that Nigeria’s Gross Domestic Product is set to grow by 3.3 percent in 2024, with projections suggesting a gradual rise to 3.6 percent in the subsequent years, 2025 and 2026. This optimistic forecast signals a potential rebound for the Nigerian economy as it adapts to changing market dynamics and policy reforms.
