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How Nigeria, Others Can Escape Global Funding Squeeze —IMF

The International Monetary Fund, IMF, has outlined some major steps it expected Nigeria and other sub-Sahara African countries should take to avoid an economic meltdown that could come against the backdrop of what it calls “the Big Funding Squeeze” happening across the world economy.

Speaking yesterday in Lagos at the IMF Regional Economic Outlook for Sub-Saharan Africa Spring 2023, entitled “The Big Funding Squeeze.” Wenjie Chen, Deputy Division Chief at IMF, said as a result of the prevailing funding squeeze Nigeria and many frontier markets were virtually shut out of the Eurobonds market since the spring of last year, and those with marginal access receive the funds at a higher cost.

She added that the repayments of maturing bonds were also coming quickly this year and for Nigeria, it was coming in June which would further limit the ability to fund the highly needed infrastructure and social development.

Consequently, she outlined fiscal, monetary and other macroeconomic policy measures that should address the difficulties.
According to Chen, fiscal policies need to reduce debt vulnerability and adapt to a tighter financing environment to address the current liquidity squeeze.

She also said monetary policies should begin to pay more attention to the inflationary pressures adding that inflation has started stabilizing, it was still too high undermining economic development.

Chen also noted that the country’s economy was facing elevated exchange rate pressures, adding that the situation was likely to persist with high-interest rates.

On both the exchange and interest rates pressures Chen said structural reforms were necessary and more important than ever to build resilience and broaden revenue.

Source : Vanguard