- The International Monetary Fund (IMF) has warned that countries with high foreign currency borrowing will face difficult times
- The IMF said that foreign exchange issues be taken to provide a monetary policy with the space to focus on domestic conditions.
- Nigeria spent about N216.1 billion on debt servicing in the third quarter, according to Debt Management Office (DMO)
Countries with high foreign borrowings and external funding, including Nigeria should brace up for possible fiscal turbulence, according to the International Monetary Fund (IMF).
In a blog post, themed ‘A disrupted Global Recovery,’ IMF discussed its World Economic Outlook.
The Debt Management Office said Nigeria spent the sum of N216.1 billion on debt servicing in the third quarter, an increase of 74.2 per cent in comparison to N124 billion recorded in the quarter before in 2021.
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Nigeria's mounting debt profile
The increase in debt service is because of a large growth in the country’s debt profile. The country’s external debt spiked to N157.5 trillion in the third quarter of 2021, an increase from N15.7 trillion in the preceding quarter of 2021.
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The four billion Eurobond raised from the international debt markets to strengthen Nigeria’s external reserve above N16.6 trillion shored up the country’s foreign debt.
According to the IMF, the recent move in monetary policy position can influence emerging economies like Nigeria in a negative way.
What the IMF is saying
IMF stated that the recent shift in monetary policy stance can affect emerging economies like Nigeria negatively.
Nairametrics said that the IMF also added that in cases of foreign exchange and international temporary capital flow management, measures may be taken to provide a monetary policy with the space to focus on domestic conditions.
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Legit.ng reported that the Debt Management Office said that Nigeria’s public debt has hit N38.005 trillion at the end of Q3.
The debts include both external and domestic of the federal government, the 36 state governments and the FCT, Abuja.
The debt represents a spike of N2.54 trillion within three months compared to the N35.46 trillion recorded in the same period at the end of June of 2021.