The International Monetary Fund has said that even though Nigeria and other low-income debtors have yet to request any debt relief recently, high debt servicing costs remain a growing challenge.
In a new report, the multilateral lender remarked that the good news was that there had not been any notable request by a low-income country for comprehensive debt relief since Ghana’s, more than a year ago.
On policy reforms aimed towards increasing revenue, the IMF commended Nigeria and three other countries for recent subsidy reforms that would create space for development spending.
It said, “Building resilience in the face of these trends requires countries to act. Some countries have made progress— for instance, Angola, The Gambia, Nigeria, and Zambia have taken steps to implement significant energy subsidy reforms to create space for development spending.”
It, however, expressed worry that many countries were lagging behind, especially in efforts to increase revenues, such as broadening the tax base, reducing tax exemptions, and increasing the efficiency of tax administration.
For instance, the typical Sub-Saharan African countries raised only 13 per cent of gross domestic product in revenues in 2022, compared with 18 per cent in other emerging economies and developing countries and 27 per cent in advanced economies.
“And those with high debt vulnerabilities can’t afford to wait. Policy reforms are needed to boost growth and capture more revenue from that growth, for instance, through tax reforms. This will directly improve countries’ key debt metrics and ensure they can avoid a costly debt crisis,” the report read further.
