Rising debt, US elections to weigh on IMF’s 2024 economic outlook

The International Monetary Fund (IMF) is set to unveil its 2024 economic outlook, spotlighting the growing risks posed by escalating global debt and its implications for both advanced and emerging economies, including Nigeria.

At the heart of the IMF’s concern is the global debt burden, expected to surpass $100 trillion by 2024—representing 93 percent of global GDP. For years, governments and corporations took advantage of low-interest rates, borrowing cheaply to fuel growth.

But this era is ending, as central banks tighten monetary policy and raise interest rates, sending borrowing costs soaring. For emerging markets like Nigeria, the challenge of managing debt has never been greater.

Debt sustainability is now in the spotlight. The IMF warns that 40 percent of sovereign bonds and 37 percent of corporate bonds worldwide are set to mature by 2026. Refinancing them under tighter financial conditions will strain economies, particularly in developing nations, which face higher interest rates.

In 2022 alone, developing countries paid $49 billion more to external creditors than they received in new loans—a net loss that constrains economic growth and investment.

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Nigeria, like many other developing nations, is already grappling with these pressures. Higher interest payments have forced governments to slash spending on critical sectors like health and education.

In 2023, a record number of 54 developing nations, including Nigeria, spent over 10 percent of their revenues on interest payments, leaving little room to address rising inflation, stagnant growth, or pressing social needs.

The IMF stresses that without a clear commitment to debt management, including reforms and targeted spending cuts, many countries risk deeper financial instability. Credible policy measures will be vital to maintaining economic resilience.

As global debt swells, countries must adopt more prudent fiscal policies to avoid being overwhelmed by financial pressures. For Nigeria and other emerging markets, navigating this landscape will require a careful balance between managing debt and fostering sustainable growth.