IMF increases Nigeria’s 2021 economic growth forecast to 2.5%

…To recommend debt repayment relief

The International Monetary Fund, (IMF), has revised upward its growth forecast for the Nigerian economy for 2021 to 2.5 percent, from its earlier projection of 1.5 percent it announced in January.

The IMF announced the new projection in its World Economic Outlook update released yesterday.

The new growth projection is 1.0 percent higher than the multi-lateral institution’s 2021 forecast in January, which was a downward review from the forecast it shared in October 2020.

This is just as there are strong indications that Nigeria may be warming up for a debt repayment relief, as the World Bank Group and the IMF said they would recommend to the G20, an extension of the Debt Service Suspension Initiative, (DSSI), by low-income countries until the end of 2021.

Nigeria is owing the two institutions about US$14 billion, while the 2021 Budget has projected to spend as much as N3.12 trillion in debt servicing during the fiscal year.

The possible relief is contained in a paper presented by staff of the World Bank/ IMF at the backdrop of its 2021 virtual Spring Meetings, which commenced yesterday. According to the paper, the recommendation has become necessary as most debtor countries are struggling with the negative effects of the Covid-19 pandemic on their economies.

The recommendation which will further provide relief from debt service under the Covid-19 pandemic initiatives requires the approval of the Executive Boards of the organisations to become their official positions.

Recall that the Nigerian economy exited recession in the fourth quarter of 2020, with a modest 0.11 percent growth.

The IMF also projected that in sub-Saharan Africa, growth will strengthen to 3.4 percent in 2021, 0.2 percent higher than the previous forecast.

In the report, the IMF said about 95 million people are likely to fall below the extreme poverty threshold during 2020–21.

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