IMF: Nigeria Continues Borrowing Despite High Debt Costs

Despite rising borrowing costs, Nigeria continues to have a strong presence in the global debt market, according to the International Monetary Fund (IMF).

During a press briefing at the IMF/World Bank annual meetings in Washington, DC, Tobias Adrian, the IMF’s Financial Counsellor, highlighted that Nigeria and other frontier markets have remained active in the debt market throughout 2024, even with financing costs significantly higher than pre-2021 levels.

“Frontier markets, including Nigeria, have been active in the debt market this year. Though access to financing is more expensive, overall issuance levels have remained encouraging,” Adrian stated.

The IMF also expressed support for Nigeria’s recent monetary policy initiatives, including interest rate hikes and foreign exchange reforms implemented by the Central Bank of Nigeria (CBN).

These measures, aimed at stabilizing the economy, were praised as crucial steps in curbing inflation, which is hovering around 30 percent.

Adrian highlighted that the CBN’s shift toward inflation targeting and the liberalization of the exchange rate are helping to alleviate the impact of rising inflation, which has been exacerbated by recent natural disasters such as floods.

Furthermore, the IMF has revised its economic growth forecast for Nigeria, predicting a slowdown in 2024 due to ongoing inflationary pressures and economic challenges.

At the same conference, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, engaged in strategic discussions with IMF Managing Director Kristalina Georgieva.

According to a statement from the finance ministry, the talks centered on Nigeria’s economic reform agenda under President Bola Tinubu’s administration and the progress achieved thus far.

Edun advocated for increased international support and concessional financing to sustain these domestic reforms, aimed at enhancing economic resilience and improving living standards.

During the G-24 leaders’ news conference, Edun also called for concessional loans from the IMF and World Bank to support Nigeria’s reform programs.

He emphasized the importance of affordable financing to protect the poor and vulnerable from the immediate costs of economic adjustments while promoting long-term macroeconomic sustainability.

In a separate session, CBN Governor Yemi Cardoso is expected to lead a discussion on strengthening connections with Nigerians in the diaspora, focusing on strategies to boost remittance inflows to help bolster foreign exchange reserves amid Nigeria’s fiscal challenges.