Reduce fiscal deficit to avoid debt crisis – IMF charges Nigeria, others

The International Monetary Fund, IMF, has called on Nigeria and other Sub-Saharan African countries to reduce the fiscal deficit by three per cent to avoid debt crises.

The IMF disclosed this on Tuesday in a report by its economist, Fabio Cormelli.

The development comes as Nigeria’s fiscal deficit to Gross Domestic Product, GDP, ratio fell to 5 per cent in 2022 from 6.3 per cent in 2021.

As a solution, the IMF advised Nigeria and Sub-Saharan countries to set a course by re-anchoring fiscal policy through a credible medium-term strategy and prepare by undertaking fiscal adjustment to bring debt back to a safer level.

“IMF staff analysis shows that most countries in the region must reduce their fiscal deficits in the coming years. The average country’s adjustment amount is about 2 to 3 per cent of GDP.

“This adjustment seems feasible given historical experience—in the past, countries in sub-Saharan African countries improved their primary balance by 1 per cent of GDP a year over two to three years,” Cormelli said.