The International Monetary Fund IMF on Friday said Nigeria’s fiscal deficit will worsen in 2021 and public debt increase to 43 per cent in five years if the Muhammadu Buhari regime does not put an end to “implicit fuel subsidies and higher security spending.”
In a publication, the fund explained that despite the rise in oil prices, the country’s fiscal deficit will worsen to 6.3 per cent in 2021 and will rise further if the Buhari regime did not come up with a bold revenue mobilisation strategy.
“Despite much higher oil prices, the general government fiscal deficit are projected to widen in 2021 to 6.3 per cent of GDP,” IMF said in its report.
The fund said the projected fiscal deficits reflects “implicit fuel subsidies and higher security spending, and remain at that level in 2022.”
It also highlighted spending pressures associated with the electoral cycle and downside risks associated with the COVID-19 pandemic as other factors responsible for the country’s worsening fiscal deficit.
The report emphasised that fiscal deficits are projected to stay elevated with a 43 per cent increase if the government fails to make bold revenue mobilisation efforts.
“Fiscal deficits are projected to stay elevated above the pre-pandemic levels with public debt increasing to 43 per cent in 2026,” the report added.
In October, the IMF said that the economic recovery of Nigeria and other sub-Saharan nations will be slowest and lagging behind developed nations.
In its report titled regional economic outlook for sub-Saharan Africa, it projected the region’s economy to grow by 3.7 per cent and 3.8 per cent for 2021 and 2022 respectively.