World Bank Recent Report Shows That Nigeria Fiscal Balance Is Improving

According to the World Bank, the continuous efforts at fiscal consolidation in Nigeria and other Sub-Saharan African countries are mainly responsible for improving fiscal balances.

In its most recent Africa's Pulse report, the WB noted this and emphasised that while fiscal balances are improving, they are progressing slowly.

According to a review of Nigeria by Premium Times, the World Bank stated: "Fiscal balances continue to improve, thanks to the fiscal consolidation measures underway in several Sub-Saharan African countries, for instance, Ghana, Kenya, and Nigeria."

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According to the report, the region's median fiscal deficit decreased marginally, from 3.8% of GDP in 2023 to 3.5% in 2024.

The report indicated that while the majority of the region's countries—31 out of 46—should see improvements in their fiscal balances, "their deficits still persist at significant levels: the median fiscal deficit among these 31 nations is anticipated to narrow from 4.8% of GDP in 2023 to 3.8% in 2024."

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It said: "Debt restructuring negotiations provide an additional incentive for prudent fiscal management in Ghana and Zambia. The median fiscal deficit in the region is projected to decline modestly from 3.8% of gross domestic product GDP in 2023 to 3.5% of GDP in 2024. Although the fiscal balance is expected to improve in most countries in the region (31 of 46), their deficits remain large: the median fiscal deficit of these 31 countries is projected to narrow from 4.8% of GDP in 2023 to 3.8% of GDP in 2024.

"Furthermore, the number of countries with large deficits exceeding 3% of GDP has dropped modestly, from a peak of 34 in 2022 to 27 in 2024. The vulnerability of African governments' fiscal positions to global shocks remains a challenge. Transformative policy actions to build fiscal buffers are essential to prevent and cope with future shocks."

The World Bank stated that increasing debt service obligations are causing liquidity issues and displacing regional development spending.

"Public debt in Sub-Saharan Africa is expected to decline from 61% of GDP in 2023 to 57% of GDP in 2024. However, the risk of debt distress remains high. More than half of the African governments grapple with external liquidity problems, face unsustainable debt burdens, or are actively seeking to restructure or reprofile their debts.

"Public debt service obligations have surged as governments in the region are exposed to market financing and non-Paris Club government loans. External borrowing is more expensive than before the pandemic, despite sovereign spreads gradually declining from their peak in May 2023. For instance, the coupon of the new Eurobond issued by Kenya this February is 9.75%, compared to the 6.875% of the Eurobond maturing in 2024," the World Bank said.

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