The International Monetary Fund,IMF, says Nigeria and 72 other countries are at high risk of debt distress or already in debt distress.
It disclosed this in a new report titled “Restructuring debt of poorer nations requires more efficient coordination”.
The bank noted that low-income countries face fewer debt challenges today than they did 25 years ago, due to the Heavily Indebted Poor Countries initiative, which slashed unmanageable debt burdens across sub-Saharan Africa and other regions.
Although debt ratios were lower than in the mid-1990s, the debts have been creeping up for the past decade and the changing composition of creditors would make restructurings more complex,the bank said.
It added:“About 60 percent of DSSI countries are at high risk of debt distress or already in debt distress—when a country has started or is about to start, a debt restructuring, or when a country is accumulating arrears.”
Spurred by low-interest rates, high investment needs, limited progress in raising additional domestic revenue, and stretched systems for managing public finances, the debt ratios of DSSI countries have increased, partly reversing a decline seen in the early 2000s.
“Now, the economic shocks from COVID-19 and the war in Ukraine are adding to the debt challenges faced by low-income countries, even as central banks start to raise interest rates.”
The report said that among the 41 DSSI countries at high risk of or in debt distress, Chad, Ethiopia, Somalia (under the HIPC framework), and Zambia have already requested debt treatment.
