Africa to expect 11% budget deficit – Rewane

Managing Director of Financial Derivatives Company, Bismarck Rewane has said that Sub Sahara Africa (SSA) countries are expected to have a budget deficit increase of 11 per cent of Gross Domestic Products (GDP).

Rewane who made this statement in Lagos during Lagos Business School executive breakfast session said that despite debt forgiveness and other relief packages, the countries would have an increase in taxation.

He said that apart from cutting down spending, belt tightening measures will be required to plug widening fiscal gaps.

He stated that rising debt stock is still a major issue in the continent, adding that the average debt to GDP of African countries is over 40 per cent. He said that the cost of servicing debt will be excruciating when interest rates start to increase. Admitting that pandemic has crippled economic activities and necessitated a cry for debt relief, he said Africa’s biggest lender is China and the country is only willing to exempt some countries from repaying zero interest loans.

Accessing the impact of Covid -19 across the world, he said Africa countries are to be hard hit by economic setbacks, adding that the degree of contraction will vary across the region. Speaking on the Nigeria economy, he said money supply growth shows the underlying threat of high powered money on price inflation, stressing that though inflation increases at a much slower pace than anticipated, naira trading at artificially low level. He said that headline inflation is set to climb to 13 per cent and it is driven by supply chain disruptions, higher logistics costs among others.

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