Uncertainty about Buhari’s health and mounting public debts might blur Nigeria’s economic progress - IMF

shakirudeen taiwo

October 30, 2017 1:47 PM

These issues are affecting investors' perception on economic and investment environments in Nigeria

The International Monetary Fund (IMF) has warned that political risks and increasing public debts would weigh down future economic growth in Nigeria.

IMF disclosed this in a report released on Monday, October 30, 2017 in Harare, Zimbabwe. The report stated Nigeria and South Africa are Africa’s biggest economies, but both nations have been clouded by political risks.

“Key downside risks to the region’s growth outlook emanate from the larger economies, where elevated political uncertainty could delay needed policy adjustments and dampen investor and consumer confidence,” the IMF said.

“A further pickup in growth to 3.4 percent is expected in 2018, but momentum is weak, and growth will likely remain well below past trends in 2019.”

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IMF also noted that the ill-health of President Muhammadu Buhari is fueling speculations about his capacity to manage the country's economy. A similar remark was made about South Africa.

More worrying is that cost of public debt and the crowding out effect of massive domestic borrowing can destabilise the domestic financial sector and fuel inflation.

“Debt servicing costs are becoming a burden, especially in oil-producing countries ... and are expected to absorb more than 60 percent of government revenues in 2017,” IMF said.

IMF advised that the country should diversify its economy from commodities and oil. It also urged Nigerian Government to implement fiscal reforms to stimulate growth and attract private investment.

shakirudeen taiwo