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Nigeria’s economy lies in the third world where the IMF plays an active role in policy-making. Such countries have large levels of external debt, but even higher internal ones. 

As of March, Nigeria was indebted to $60 billion from internal sources and $39 billion from external. And these statistics have been rising in the recent past without a hint of staying constant. Now that the country is in a debt of more than $100 billion, authorities are alarmed as much as the public. 

One of the crucial policies that Nigeria follows for debt management includes a key role of the DMO or debt management office. Such offices and departments work in line with the Ministry of Finance in all international and internal matters of money. Unfortunately for some time Nigeria’s policies related to finance are ineffective and debt management is compromised. The president is always supposed to set a debt limit right after elections and the conclusion of important events. However, in many past years, no debt limit is set and the one being carried forward is certainly exhausted. A debt limit is crucial for a state to plan its resources, limit or expand horizons and collect funds through the fastest channel. 

While there are efforts being made by the government, this can ruin the current party’s chances in the upcoming elections. Most of the time elections do cause a lot of productive efforts from all sides of the government. However, this seems like an irreversible issue that will only recover in the long term. Some likely solutions are a boost in tax collection and promoting business activity. But trying to collect more taxes in an election period is certainly not wise. In the recent conference, members from the African Network for Environment and Economic Justice have also raised transparency concerns. 

The executive director of this council has stated that debt is the biggest obstacle to prosperity at this point. It makes Nigeria a bad place to invest for investors even though the demand is sufficient. He also said that uncertainties in policies due to help taken from the IMF can cause problems in the future as well. Nigeria also took a large amount of loans and funds in other forms during the pandemic as well. The biggest loan that is posing problems in the status quo is an SDR (Special Drawing Right) that the government took during COVID-19. This was a fund of $3.5 billion, which they took after a $3.4 billion SDR in 2021. Both of these remain unpaid as of yet and are not a part of any plans that the government has set. 

Some other initiatives that officials suggested are Debt Recovery Management systems. These systems can utilize the country’s internal resources to channel funds. They will track the financial channel for any illicit activity. They can also govern unnecessary tax avoidance and holidays that businesses might take with the help of lawyers.

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