This was expressed by Wenjie Chen, the IMF’s Deputy Divisional Chief, in a keynote address at the International Monetary Fund Regional Economic Outlook on Tuesday in Lagos.

Chen claims that the economies of Sub-Saharan African countries like Nigeria have continued to be strained by high borrowing costs, high-interest rates, and the rising value of the dollar.

She pointed out that loans from China and other developed economies to Africa have decreased as a result of the unpredictability surrounding the world economy.

Stating that the public debt ratio has doubled in the region in the past decade, Chen added that the debt vulnerabilities of Nigeria and the rest of SSA would continue to increase.

Chen said, “In terms of the funding squeeze, the three main manifestations that many countries are facing are: the rise in borrowing costs. You can see that virtually all the frontier markets have been shut out of the Eurobond markets since the spring of 2022. What that means is that they cannot raise financing on these international markets. The Eurobond market has been a large component of financing for these countries.

“Lastly, what this has meant in terms of the global economy’s reaction to the Russia-Ukraine war in terms of rises in price and the cost of living crisis has placed very high-interest rates. Not only were interest rates rising, the value of the dollar rose to a 20-year high last year. For many African countries, the cost of servicing these debts has also gone up.

“Inflation is still a major concern for many African economies. Many countries are still going through recovery after the pandemic.”

To address the many issues confronting the Nigerian economy, Chen said the IMF’s policy advice to Nigeria is based on four key policy priorities — fiscal policy, monetary policy, exchange rate policy, and structural reforms.

She said the new emphasis on addressing the current liquidity squeeze should focus on reducing off-budget commitments (extra-budgetary spending, arrears, guarantees, etc), enhancing debt management, and domestic revenue mobilization.

On forex-related challenges, Chen said that significant exchange rate pressures in the past year largely reflect global factors; terms of trade changes, and monetary policy normalization.

Noting that the scope of forex interventions is limited in many cases by low foreign reserves, she said Nigeria and its counterparts would have to adjust to new fundamentals.

Also speaking, IMF Representative for Nigeria, Ari Aisen, said that with the funding squeeze, it would be critical for Nigeria to rely on internally-generated funds.

He, however, said that the global lender remains confident of its earlier projection that Nigeria’s economy will grow by 3.2 percent this year.

Ari further stated that for Nigeria’s economy to react positively to this funding squeeze, the private sector needs good macroeconomic policies to thrive.

Ari said, “In Nigeria, we always believe that growth has the potential to be much higher, but because of the shocks since the pandemic and the food price shock because of the Russia-Ukraine war, the economy managed to grow by three percent. We are forecasting 3.2 (this year).

“It could be higher. It’s helped by services which are the main driver of growth on the supply side of the economy. The oil sector has not also contributed as much as it should have contributed, partly because of investments in the sector and partly because of leakages, particularly oil theft. These issues are gradually being addressed and we are hopeful that it will continue, so we are now projecting 3.2 percent growth.”

According to a statement from Reuben Muoka, Director, Public Affairs, the Commission had published a draft IM and requested stakeholders to make comments and inputs into the document to enrich its contents.

“Subsequently, stakeholders’ comments were collated and discussed at a Stakeholder’s Engagement forum hosted by the Commission on November 15, 2022, at the Marriott Hotel, Ikeja, Lagos, on the same subject.

“All comments have been considered, and a final Information Memorandum to guide the upcoming auction is now available on the Commission’s website (www.ncc.gov.ng) with the link.

“The Commission requests that all stakeholders check public notices in the dailies and visit the website to study and review the final IM.”