The International Monetary Fund (IMF) has adopted a cautious stance on granting debt relief to African countries, including Nigeria and Ghana.
The IMF recommends that countries in need of debt relief should engage in discussions with individual creditor nations to devise optimal solutions.
Mr. Abebe Selassie, the Africa representative of the IMF and Director of the African Department, emphasised the importance of African nations working towards mitigating the impact of inflation in their respective economies.
Total debt cancellation for countries like Nigeria and Ghana is not a viable option, according to the IMF.
Mr. Selassie highlighted that approximately 50 percent of the total debt in African countries is domestic, making debt cancellations a complex proposition. He emphasised that there is no one-size-fits-all solution to eliminate these debts and that country-specific negotiations on debt rescheduling are essential.
The IMF plans to manage these debts through discussions with creditor nations to find sustainable solutions to the challenges at hand.
The IMF also underscored the need for increased private investment and consumption to boost economic growth in many parts of Africa by 2024.
In its recommendations, the IMF encouraged African countries to tackle inflation. Mr. Selassie acknowledged that inflation in Africa remains a concern and called for a harmonious approach between monetary and fiscal policies to address this issue. He stressed that many countries face the struggle of maintaining growth and creating sustainable employment opportunities.
Over the past decade, the IMF has disbursed around $80 billion to African countries for emergency funding and Special Drawing Rights (SDR) allocations. As of September 2023, the IMF’s SDR for Nigeria stand at 2147.69 million, with a total SDR allocation of 3363.51 million and a SDR quota of 2454.5 million.
In 2022, the IMF cautioned Nigeria and other developing countries against accepting loans from China due to unfavourable loan conditions. African nations are increasingly advocating for debt relief within the G24 group of countries. The G24 has submitted a series of proposals to the IMF and the World Bank at the ongoing IMF/World Bank meeting in Marrakesh, Morocco. G24 members expressed concerns about the growing public debt in developing countries, stating that these nations require assistance to manage their unsustainable debt burdens, which impede their ability to meet debt-servicing obligations.
Mr. Wale Edun, Honourable Minister of Finance and Coordinating Minister of the Economy, highlighted that the G24’s statement calls for effective debt resolution mechanisms to support post-pandemic economic recovery. He further urged G20 members to eliminate export restrictions on fertilizer and grains.
