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Nigeria’s engagement with the global debt market remains vibrant despite challenges posed by high borrowing costs, the International Monetary Fund has said.
During a press conference on the global financial stability report at the IMF/World Bank annual meetings in Washington DC, the IMF’s Financial Counsellor and Director of Monetary and Capital Markets, Tobias Adrian, said that Nigeria and other frontier markets have maintained significant activity in the debt market throughout 2024, even though financing costs have surged compared to pre-2021 levels.
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.”
However, the IMF expressed support for Nigeria’s recent monetary policy measures, particularly the Central Bank of Nigeria’s interest rate hikes and foreign exchange reforms, which have been designed to stabilise the economy.
Adrian noted that the CBN’s shift toward inflation targeting and its efforts to liberalise the exchange rate has been crucial in addressing inflation, which remains close to 30 per cent.
Adrian further stressed the importance of these reforms, particularly given the inflationary pressures compounded by recent natural disasters, such as floods, which have worsened living conditions for many Nigerians.
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.
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.”
However, the IMF also noted that the projected growth for 2025 stands at 3.2 per cent, which is 0.2 per cent higher than the projections made in July and April this year.
The IMF’s projection is much lower than that of the World Bank for 2024 and 2025.