Juliana Taiwo-Obalonye, Washington DC
Nigeria and other debtor countries have been warned by the International Monetary Fund (IMF) of risk associated with debt repayment following growing global debt levels.
This is even as the IMF has warned that voters’ disillusionment raises the threat of political developments that could destabilize a range of economic policies in the future, reaching beyond trade policy.
Nigeria’s next general elections holds on February, 2019.
According to tradingeconomics.com, External Debt in Nigeria increased to 18913.44 USD Million in the fourth quarter of 2017 from 15352.13 USD Million in the third quarter of 2017.
External Debt in Nigeria averaged 7806.46 USD Million from 2008 until 2017, reaching an all time high of 18913.44 USD Million in the fourth quarter of 2017 and a record low of 3627.50 USD Million in the first quarter of 2009.
Economic Counsellor and Director of Research at the IMF, Maurice Obstfeld, told journalists during the presentation of the World Economic Outlook (WEO 2018), at the on going 2018 Spring Meetings in Washington DC, that “looking past the next few quarters, there are notable risks to the outlook as… global debt levels – private and public – are very high, threatening repayment problems as monetary policies normalize in an environment where many economies face lower medium-term growth rates.”
Obstfeld said the “new Global Financial Stability Report shows, global financial conditions remain generally loose despite the approach of higher monetary policy interest rates, enabling a further buildup of assets-markets vulnerabilities.”
He further warned that “geopolitical risks should not be discounted as well as the recent escalating tensions over trade which present a growing risk.”
These risks Obstfeld said could already be taking a toll noting that “global purchasing managers’ index (pmi) remain in expansionary territory, they have recently softened in advanced and emerging markets economies alike owing in part to weakening export orders.”
He explained further said the world economy is showing “broad-based momentum but that the prospect of a similar broad-based conflict over trade presents a jarring picture.
The IMF Research Director said despite the good near-term projections, longer-term prospects are more sobering. While advanced countries are facing aging population, falling rates of labour force participation and low productivity growth, they may not likely regain the per capita growth rates they enjoyed before the global financial crisis.
With regards to Nigeria and other commodities exporters, the IMF reiterated the need for diversified or risk losing out on the growth outlook for the future.
According to the IMF, “emerging and developing economies present a diverse picture, and among those that are not commodity exporters, some can expect longer-term growth rates comparable to pre-crisis rates.”
However he warned that Nigeria and other commodities dependent economies may not be so lucky despite improvement in the outlook for commodity prices.
“Those countries will need to diversify their economies to boost future growth and resilience.”
Going forward, the IMF advised that “each national government can do much on its own to promote stronger, more resilient, and more inclusive growth.”
Also Multilateral cooperation Obstfeld noted “remains essential, to address a range of challenges in addition to the governance of world trade.
These challenges he said include, climate change, infectious diseases, cyber security, corporate taxation, and control of corruption, among others.
He added that, “global interdependence will only continue to grow; and unless countries face it in a spirit of collaboration- not conflict – the world economy cannot prosper.”
The business and finance world – led by the World Bank and IMF – have converge on Washington DC with a focus on gender equality, human capital investment, cryptocurrencies, sustainability and private sector investment.
Deliberating on these topics and others, political leaders, civil society organisations and private sector leaders will chart a way forward.
Some of the Nigerian delegates at the meetings are Kemi Adeosun, minister of finance, Godwin Emefiele, governor of the Central Bank of Nigeria, Tony Elumelu, chairman, Heirs Holdings, Omobola Johnson, honorary chairperson, Alliance for Affordable Internet and former minister of communications, Amina Mohammed, the deputy secretary-general of the UN and former minister of environment.
Others are Seni Sulyman, Andela’s vice president, global operations, Oyindamola Olabopo Ogundeji, designer and CEO of Fashpa.com and Ugwem Eneyo, founder of a start-up IoT and software firm, Solstice Energy Solution.