Tanzania holds the top spot with a debt-to-GDP ratio of 41.8%, reflecting its prudent financial decisions.
Contrary to common belief, the International Monetary Fund (IMF) has ranked Nigeria’s debt-to-GDP ratio, a key indicator of a country’s financial strength, as the second lowest in Africa, underscoring its economic stability.
This ranking underscores the importance of evaluating a country’s financial strength through metrics like the debt-to-GDP ratio.
A lower ratio suggests economic stability, while a higher ratio raises alarms about debt sustainability.Tanzania, a model of careful debt management, holds the top spot with a debt-to-GDP ratio of 41.8%, reflecting its prudent financial decisions.
Nigeria follows closely with a ratio of 41.3%, signifying its crucial role in Africa’s economy, even though its external debt stood at $41.59 billion or N31.98 trillion as of December 2023.Nigeria’s relatively modest debt levels are due to several reasons, including its diverse economic sectors and efficient debt management practices.
According to the Nigerian Tribune, the Debt Management Office (DMO) reports that Nigeria’s total debt is approximately N97.34 trillion.Through careful debt management, Nigeria has maintained economic stability and boosted investor confidence, resulting in a favourable debt position despite its significant role in Africa’s economy.
African nations with low debt levels, like Nigeria, are not only more attractive to investors but also stand a higher chance of receiving additional financial support from global and local creditors, thanks to their reduced economic risk.
Nigeria’s higher ranking than Cameroon, Chad, Comoros, Equatorial Guinea, Guinea, Ethiopia, Botswana, and the Democratic Republic of Congo highlights its strong debt standing.
Source:- Pulseng
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