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Tag: IMF

  • IMF urges countries to use fiscal policy wisely

    IMF urges countries to use fiscal policy wisely

    The IMF on Wednesday urged countries to press forward with nuanced tax and spending policies due to political and economic realities in the U.S, Europe and China.

    The IMF said in Washington that wise fiscal policy would help other countries overcome the political and economic realities in the U.S. and others.

    The IMF report came as policymakers began gathering in Washington for the semi-annual meetings of IMF and World Bank member countries.

    Finance ministers and central bank governors from the Group of 20 major economies, known as the G20, are also scheduled to meet on the sidelines of the April 21- April 23 conference.

    According to IMF, “the lack of specificity about the size and composition of the expected fiscal stimulus in the U.S, a number of elections in Europe and the upcoming party congress in China all contribute to policy uncertainty.”

    On global economy, IMF also said that overall public debt in advanced economies should stabilise in the medium term, while fiscal deterioration in emerging economies appeared at an end.

    The IMF warned too that emerging market and developing economies remained at risk from a more rapid rise in interest rates, a large appreciation in the U.S. dollar and lower commodity prices.

    All could “exacerbate debt vulnerabilities and trigger the materialisation of contingent liabilities, in particular those related to implicit government guarantees on corporate borrowing,” the IMF said.

    The IMF has long advocated for growth-friendly fiscal stimulus in countries that require a boost, but has also warned robust economies to be fiscally prudent during good times.

    The IMF urged the U.S. to begin fiscal consolidation next year “to put debt firmly on a downward path” given that the economy is close to full employment.

     

  • IMF advises CBN to adopt flexible exchange rate

    IMF advises CBN to adopt flexible exchange rate

    • Seeks fiscal policies adjustment to oil price fall

    The International Monetary Fund (IMF) yesterday released its World Economic Outlook (WEO) in which it advised Nigeria to adopt flexible foreign exchange regime to restore values of revenues and the naira.

    Speaking at a media briefing to unveil the report at the ongoing IMF/World Bank Spring Meetings in Washington D.C, its Chief of World Economic Studies Division, Oya Celasun, said the economy can benefit, if exchange rate regime allows for adjustment.

    She also challenged Nigeria and other African countries to adjust their fiscal policies, in line with the continued drop in crude oil prices.

    “Fiscal policy has to adjust to new realities of oil price fall, even though it is a difficult adjustment. It requires coherent of policies. In many cases, that should be achieved by focusing more on domestic revenue mobilisation and to some extent, by rationalising expenditures,” she said.

    Celasun said there was also broader need to diversify the economy away from basic commodities for growth, such as crude oil to achieve sustainable growth.

    Also speaking at the press conference, its Economic Counsellor/ Director of Research, Maurice Obstfield, said the Fund will continue to engage governments in emerging markets, but added that it was hard to be optimistic because of the challenges faced by such economies.

    He said each African country remains different in terms of economic challenges they face, and such problems will require diverse solutions.

    He projected that world economy will grow at 3.5 per cent this year, up from 3.1 per cent last year, and 3.8 per cent in 2018.

    He said despite the signs of growth, many countries will continue to struggle this year with growth rates significantly below past readings. “Commodity prices have firmed since early 2016, but at low levels, and many commodity exporters remain challenged- notably in the Middle East, Africa, and Latin America. At the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation,” he said.

    According to him, income growth could fall slightly short of population growth in sub-Saharan Africa, but not by nearly as much as last year.

    Extracts from the WEO showed that while chance growth will exceed expectations in the near term, significant downside risks continue to cloud the medium-term outlook, and indeed may have intensified since IMF’s last forecast.

    It said commodity exporters, including Nigeria, will account for most of the projected pickup in emerging market and developing economy growth in 2017–19, even though their projected growth recovery is relatively modest compared with the striking decline in their growth rates over the past five years.

    It said the negative impact of the large decline in Chinese growth on aggregate growth in emerging market and developing economies is  attenuated by China’s rising weight in the group, which reflects a growth rate substantially above most of the rest of the group.

    The report said share of the 1.6 percentage point decline in growth between 2011 and 2016 is attributable to the drastic slowdown in Nigeria, an oil exporter that in 2016 accounted for more than 20 per cent of purchasing- power-parity GDP of low-income countries and about half of the GDP of commodity exporters in emerging markets.

  • IMF urges Nigeria to adopt flexible exchange rate

    IMF urges Nigeria to adopt flexible exchange rate

    The International Monetary Fund (IMF) on Tuesday released its World Economic Outlook (WEO) and advised Nigeria to adopt flexible foreign exchange regime to restore values of revenues and the naira.

    Speaking at a media briefing to unveil the WEO, at the ongoing IMF/World Bank Spring Meetings in Washington D.C, IMF’s Chief of the World Economic Studies Division, Oya Celasun, said the nation’s economy will benefit from flexible exchange rate.

    She also challenged Nigeria and other African countries to adjust their fiscal policies, in line with the continued drop in crude oil prices.

    “Fiscal policy has to adjust to new realities of oil price fall, even though it is a difficult adjustment. It requires coherent of policies. In many cases, that should be achieved by focusing more on domestic revenue mobilization and to some extent, by rationalizing expenditures,” she said.

    Celasun said there was also broader need to diversify the economy away from basic commodities of growth, such as crude oil to achieve sustainable growth.

    Also speaking at the press conference, IMF’s Economic Counsellor/ Director of Research, Maurice Obstfield, said the Fund will continue to engage governments from emerging markets, but added that it was hard to be optimistic because of the challenges faced by such economies.

    He said that each African country remains different in terms of economic challenges they face, stressing that such problems will require diverse solutions.

    He projected that world economy will grow at a pace of 3.5 per cent this year, up from 3.1 per cent last year, and 3.8 per cent in 2018.

     

  • LCCI faults IMF’s stand on monetary policy

    LCCI faults IMF’s stand on monetary policy

    The tight monetary policy recommended for Nigeria by the International Monetary Fund (IMF) is inconsistent with economic recovery process, the Lagos Chamber of Commerce and Industry (LCCI), has said.

    Speaking with reporters in Lagos,  LCCI Director-General Muda Yusuf said the Chamber does not share IMF’s view that monetary policy needs to be further tightened at this time.

    Tightening the monetary policy was part of the report of the IMF Article IV Consultation on the Nigerian economy. The IMF Article IV Consultations is an independent assessment of the Nigerian economy and the current economic management framework.

    But Yusuf argued that it is inappropriate to call for further tightening of monetary policy in an economy that is grappling with recession, high unemployment, high operating costs, high interest rates, and faltering real sector.

    “Already, interest rate ranges between 25 and 30 per cent and this is adversely affecting businesses and stifling economic growth,” he said.

    The IMF recommendation on review of existing Value Added Tax (VAT) and excise duty also did not go down well with LCCI.

    “Such a move would not be consistent with the economic recovery process. It will also not be consistent with the Federal Government’s vision to build an inclusive economy, spur growth, support the real economy and create jobs,” Yusuf argued.

    The LCCI DG, however, agreed with the IMF’s concern over Nigeria’s fiscal deficit increase from 3.5 per cent of Gross Domestic Product (GDP) in 2015 to 4.7 per cent of GDP in 2016.

    He said that the increase in the nation’s fiscal deficit occurred in spite of the under performance of the capital expenditure during the period.

    He attributed this to the high cost of governance and revenue shortfalls over the period. “It clearly raises concern over the fiscal sustainability in the management of the economy. It underlines the need to keep an eye on the size of recurrent expenditure and other measures to promote fiscal consolidation,” Yusuf said.

    He also said LCCI shares IMF’s concern about the increasing cost of debt service in the economy. “In the 2017 budget, debt service allocation is N1.66 trillion and this is 35 per cent of projected revenue and over 70 per cent of the projected capital spending. This disproportionate resource commitment should be a cause for concern,, he said.

    The LCCI, according to Yusuf, also aligns with the IMF on the need to ease foreign exchange restrictions to boost foreign exchange inflows from autonomous sources and strengthen investors’ confidence.

    He lauded the Central Bank of Nigeria’s intervention in the foreign exchange market, but said that a sustainable framework for the market was inevitable for economic growth.

     

  • Our Girls; IMF; NASS

    Our Girls; IMF; NASS

    Our Girls are still missing since April 14th 2015
    IMF Prescription: Medicine or Machiavellian Mischief?
    We have had relations with the International Monetary Fund (IMF) before and been left with our youth devastated, raped and robbed of a future. Africa, Nigeria and the youth in the 70-80s, lost a chunk of their future achievement and income potential to IMF conditionalities and mis-advice. IMF makes you feel small. Such funds and banks have few morals, just secret missions to enslave societies to IMF financiers. To them, MONEY MATTERS MORE THAN MORALS OR MANKIND. Though apparently reformed, it is still trying to further discredit our currency, recovering from a multi-pronged attack which decimated it and the earning power of every citizen. Many countries fight the IMFs call to devalue. Why should we stand by while our currency is ambushed by IMF advice? Everyone in IMF earns dollars and cares little for our Naira. Is the IMF the World Economic God and trustworthy? Is the IMF so uncomfortable with the Africa’s cheaper loans from China that it seeks to weaken us making the loans more difficult and expensive to repay. Every Nigerian nationalist must ‘fight the naira fight’ – our only pride and power. Why do we give it up so easily?
    Tragically for me and millions of my generation, and I am very annoyed that in my working lifetime bad governance has reduced Naira value from N1:$1.5 to N500:$1. Yet strangely we still seek advice from our Presidents who supervised the underdevelopment of Nigeria and destruction of our naira. No bank manager wants you to buy official dollars. They always use an intermediary to jack up the price. Among our leaders, only Buhari has defended the naira value. He does not own a foreign account and seeks to leave the currency where he ‘met it’ when it was N150 to $1 or when he was last President at N8:$1? A strong naira makes loans cheaper and life more abundant with fewer below the poverty line.
    IMF got it maliciously wrong dragging Africa back in education and health adding to the effect of corruption. IMF’s bad reputation made me call the IMF the International Morticians Fund because it buried millions of youth dreams and call the World Bank its wicked sister body, the Woe Bank because it brought woe to many millions. They are both their funding master’s voice. Is the IMF wrong again? Can this government prove the IMF/WB twins wrong by increasing foreign reserves to $50+billion ASAP? If not, is our currency again destined for the dustbin to further enrich those with foreign accounts, Nigerian banks who take our remitted dollars and deliver naira to Nigerians and foreigners with assets in Nigeria who benefit from a weak naira? The IMF prescription is poisonous medicine and Machiavellian Mischief in intent. The cure will kill the patient- again!
    Senate or Circus continued
    NASS members should not sit easy in NASS. Nigerians see blood when they see Red Senate in sitting on TV. Firstly the Red of Senate seats is not signifying ‘Royalty’ or ‘Refugee Status’ for wayward governors and businessmen seeking ‘Immunity for and from their crimes’. Each NASS seat represents at least ‘100 DIED IN DEMOCRACY & ELECTION ACTION’. EVERY SENATE AND REPS SEAT SHOULD RESPECTFULLY BE NAMED AFTER A HERO OR HEROINE OF DEMOCRACY. SENATE RED IS THE HIGHEST NATIONAL MEMORIAL TO THE BLOOD SHED BY NIGERIA’S ‘DEMOCRACY DEAD AND DEPRIVED’. Senate Red is a flag waved arrogantly before the Nigerian Bull.  The REPS GREEN REPRESENTS THE GREEN BILE VOMITED BY THE THOUSANDS OF INCARCERATED DEMOCRACY AND ELECTION VIOLENCE VICTIMS. The democracy struggle is in two parts –struggle against the MILITARY COUP plotters and struggle against non-democratic forces seeking to pervert the course of democracy –the election of civilian coup plotters. So the red and green seats drip with real memories. Are NASS members too self-centred for the job of using NASS for the care of the people? If in our opinion this is not done, we the people do not have to watch our words when castigating NASS members. NASS members are obviously under the illusion that obtaining a certificate from sometimes criminal INEC officials gives its members the right to bite the citizens’ hand. NASS likes congratulations and unearned prefixes of ‘Distinguished this’ and ‘Honourable that’. NIGERIANS SHOULD WITHDRAW SUCH POMPOUS TITLES for disgracing NASS, the institution in the eyes of many.  We the people are supreme and will speak and judge it how we feel. Neither Senate nor Representatives is above the citizens ‘Call to Order’. It is time to start a tradition of midterm recall to account for stewardship and to pass the people’s verdict on each NASS member.
    NASS is our proxy, our servant in this democracy; our representative which has forgotten ‘true representation’ and never asks our opinion outside public hearings, and is too expensive@N120-150b/annum and resistant to change. Servants must be put in their place. As a voter, has any politician sought your opinion? Our mistake since the inception of Nigeria was to allow politicians to become God-like and insulate themselves. While we need 150,000Mw but collapse to a disgraceful 2,500Mw, politicians empower and enrich themselves.  Are Oyo State’s new LGA caretaker chairmen taking chunks of funds as fully fuelled 24/7 generator power and other perks? The cycle continues! Happy Easter!!
    NB: FIND a new generation of untainted ‘I LOVE NIGERIA’ KNOWLEDGEABLE CANDIDATES for 2019.    www.tonymarinho.com

  • IMF’s Naira revival pill rejected

    IMF’s Naira revival pill rejected

    •Fund: currency overvalued by 20%

    If the Federal Government heeds the International Monetary Fund’s (IMF’s)  advice, it will collapse the exchange rates—official N306/$ and Bureau De Change  N360/$.

    To the IMF, the Naira is overvalued by 10 to 20 per cent.

    The IMF mission chief for Nigeria, Gene Leon, said that the Naira overvaluation “is somewhere to the tune of 10 to 20 per cent and that  the country’s 2017 projections for non-oil revenues are more optimistic than the Fund’s.

    He urged the authorities to increase tax levels to diversify income.

    Leon disclosed that the Nigerian authorities were concerned about the IMF’s last week Article IV Report.

    The Fund warned that the economy required urgent reforms and spoke of the dangers of a volatile foreign exchange market.

    It outlined a raft of failings in the Federal Government’s handling of Africa’s largest economy which could affect talks over at least $1.4 billion in international loans.

    But the President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the IMF should explain the yardstick for its advice.

    According to him, the IMF has technically said that the official rate of N306/$ should move to N360/$.

    Gwadabe said: “The IMF and others look at the bureau de change rate. That is why we are saying there should be a special window for both entry and exit to encourage more capital inflows to supplement the foreign reserves and diversify dollar sources.”

    The Naira closed yesterday at N390/$ due to the Central Bank of Nigeria’s (CBN) intervention.

    The Managing Director, E.M Consolidated Investment Limited, a BDC operator, Emeka Moses, said the IMF has not explained the basis of its judgment on further naira devaluation.

    “Their judgment is not correct. The IMF and their group have since 1980s have been insisting that the naira be-devalued further. But we have continued to devalue to where it is today. The value of the currency cannot be taken singularly. There are many things that determine how the country runs its exchange”, he said.

    Moses said that Nigeria has inflationary economy, and cannot devalue more because it is not going to help us and we are trying to encourage local production.

    He added: “They are not in a position to give us a comprehensive economy plan, but they are not the ones running our economy.”

    The new report, according to Reuters, strikes a more critical tone than the Fund’s board adopted in a statement last week, though that also said the country should lift its remaining foreign exchange restrictions and scrap its system of multiple exchange rates.

    The IMF quoted the government saying further measures were under way which included the implementation of a more flexible foreign exchange market and “maintaining tight monetary policy to underpin price stability.

    “Nigeria has not asked the Fund for fiscal support but its recommendations may influence institutional lenders ahead of the annual spring meetings with the World Bank.

    “The World Bank has been in talks with Nigeria for more than a year over an application for a loan of at least $1 billion and the African Development Bank (AfDB) has $400 million on offer. But talks have stalled over economic reforms.

    “Nigeria fell into recession last year, its first in 25 years, largely due to the impact of low oil prices and militant attacks on energy facilities in the Niger Delta oil hub. Crude sales account for more than 90 percent of foreign exchange earnings and two-thirds of government revenue.

    “The country, whose economy contracted 1.5 per cent last year, has also been plagued by a conflict with Boko Haram militants since 2009, creating a humanitarian crisis in the northeast which authorities are struggling to handle.”

    The Washington-based Fund’s analysis coincided with yesterday’s launch of an economic recovery plan by President Muhammadu Buhari.

    But the IMF said the plan (Economic Recovery and Growth Plan), criticised by economists for including few concrete measures, “is not enough to drag the economy out of recession.”

    “If Nigeria’s economy is to recover, much more needs to be done, the IMF said in the staff report.

    It also urged the Federal Government to introduce immediate changes to its exchange rate policy – characterised by CBN curbs, multiple exchange rates and an artificially high naira valuation – or risk “a disorderly exchange rate depreciation”.

  • Naira overvalued by 20% – IMF

    Naira overvalued by 20% – IMF

    The International Monetary Fund (IMF) on Wednesday said the naira is overvalued by 10 to 20 per cent.

    The IMF mission chief for Nigeria, Gene Leon, said the overvaluation of the naira is “somewhere to the tune of 10 to 20 per cent” and the country’s 2017 projections for non-oil revenues are more optimistic than the Fund’s.

    He also urged Nigerian authorities to increase tax levels to diversify its income.

    Leon said Nigerian authorities were concerned about the IMF’s earlier staff report’s view.

    The Fund warned that Nigeria economy needs urgent reform and the dangers of a volatile foreign exchange market.

    It outlined several failings in the government’s handling of the economy and could affect talks over at least $1.4 billion in international loans.

    But President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the IMF officials should explain the yardstick for their advice.

    He said what the IMF is technically saying was that the official rate of N306 to dollar should move to N360 to dollar.

    “The IMF and other agencies look at the bureau de change rate. That is why we are saying there should be special window for both entry and exit to encourage more capital inflows to supplement the foreign reserves and diversify dollar sources,” he said.

     

  • Economist backs IMF’s declaration on Economic Recovery Plan

    An economist, Dr Aminu Usman says he is in support of declaration by the International Monetary Fund (IMF) that the recently released Economic Recovery and Growth Plan (ERGP) will resuscitate the country’s economy.

    Usman, a lecturer at the Department of Economics, Kaduna State University said this in an interview with the News Agency of Nigeria (NAN) on Monday in Abuja.

    He said the ERGP would help move the country out of recession and probably put the country on the path of sustainable development.

    The IMF had expressed confidence in efforts taken by the Federal Government in a document, which was recently obtained by NAN through the Executive Board at the conclusion of its 2017 consultation with Nigeria.

    The IMF noted that the economy had been negatively impacted by low petroleum price and production.

    The Fund commended the efforts already made by the government to reduce vulnerabilities and enhance resilience, including increasing fuel prices, raising the monetary policy rate, and allowing the exchange rate to depreciate.

    Usman, however, said the ERGP was announced without its implementation plan.

    “It is expected to impact on this year’s budget and we are already in April and yet the budget component of the ERGP is yet to be passed and signed into law.

    “So the optimism expressed by IMF is not misplaced but their recommendations are irregular.

    “The plan should be developmental and not revenue earning focus.

    “What we need is to lower corporate taxes but not to increase it,’’ he said.

    The don said the ERGP should promote local production and export but not to impose or increase excise duties.

    He also said that the government should allow zero excise duty as a way of promoting competitiveness.

    NAN reports that ERGP envisages that by 2020, Nigeria will make significant progress to achieve structural economic change with a more diversified and inclusive economy.

    The plan would deliver on five key broad outcomes, namely: a stable macro-economic environment, agricultural transformation and food security as well as sufficiency in energy.

    Other outcomes are improved transportation infrastructure and industrialisation with focus on Small and Medium Scale Enterprises.

  • IMF’s jaded litany

    Some days are plain, outright more complicated than the others. One means this in every respect of life, but Hardball situates it of course to his daily drudgery of churning out this stuff you have before you right now. In one of those doggone days, to find a suitable headline could cost one the entire day.

    Then piecing together this hoary piece would sometimes drag to what seems like eternity; sapping all of one’s energy and creative juices. This is one of such days. To debate the International Monetary Fund (IMF) could be quite daunting of course for obvious reasons. Then to delve into the arcana of IMF-speak would challenge most non-members of this global money cult.

    Consider this quote from the present IMF assessment of Nigeria’s economy in which the Fund urges Nigeria’s government to: “Remove the remaining restrictions and multiple currency practices, thus unifying the foreign exchange market and helping regain investors’ confidence…this should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations and to limit the risk of exchange rate overshooting, as well as structural reforms to improve competitiveness.”

    As you can see, in the first place, IMF and its ilk don’t speak in English. That would be beneath their rarefied minds. They speak in coded econometrics and digitalised sound bites. This way simpletons like Hardball cannot deign to understand, not to speak of interpreting them.

    This must have presented Hardball’s first mental block that would not let him get off the headline blocks. But back to the story, we were going to headline it “Wetin IMF they talk sef?” But this would be too pedestrian to command any consideration of the issues raised here. We would then have embarked on a fruitless effort amounting to sound and fury. (As if this would not amount to naught, anyway).

    Gush! So what really is all this extended ramble about; what is Hardball’s point? Well, he thinks IMF’s litany about Nigeria and developing country’s economy is jaded. He thinks IMF is one-track minded about its prescriptions all the time.

    It’s always currency, currency; about allowing the currency to float even with no productive foundation for it to anchor on?

    Second, IMF is forever and callously pushing for increased taxes in horrifically impoverished environment where chicken feed salaries don’t even come anymore. Who would school these skinheads that our government do not really suffer from a lack of liquidity but transactional deficiencies (I hope I got that right?), or to put it in my words, it is the application of funds that is deficient.

    Finally, Hardball prays that someday, IMF would be kind enough to appeal to Britain, US and major European states to be kind enough to repatriate billions of dollars of stolen funds, some of which are stashed in some IMF outlets and channels.

    Yes hand back the loot, IMF!

  • Unify exchange rates, IMF advises Nigeria

    Unify exchange rates, IMF advises Nigeria

    •Experts seek forex restrictions retention

    The Executive Board of the International Monetary Fund (IMF) yesterday released the Article IV Consultation on Nigeria in which it urged the authorities to remove restrictions and multiple currency practices.

    The directors also praised the recent easing of some exchange restrictions which would lead to unifying the foreign exchange market and helping regain investor confidence.

    They emphasised that these policies should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations and to limit the risk of exchange rate overshooting, as well as structural reforms to improve competitiveness.

    Speaking on the call for exchange rate convergence, former Executive Director, Keystone Bank, Richard Obire, said the CBN should move towards unified exchange rate or narrow the rate differentials to between 10 to 15 per cent. He said that multiple exchange rate creates distortion in prices and hurts businesses.

    “The CBN is already moving towards that direction, and that has made currency speculators to retreat. It is good advice but given the variables outside the CBN, especially low crude oil prices, it can be achieved with increased foreign exchange revenues,” he said.

    Obire said unified exchange rate will be positive for the market as multiple exchange rates lead to distorted pricing and adversely affects Foreign Direct Investment (FDI) inflow.

    He, however, said the call for import restrictions was not acceptable as it will not support economic growth. “The IMF has always asked for open market economy. But I do not agree with that because Nigeria’s economy is weak and small and cannot allow everything to come in,” he said.

    Obire said the items on the import restriction list could be reviewed, leaving out inputs that are key in boosting production in the manufacturing sector.

    Association of Bureaux De Change Operators of Nigeria (ABCON) President Aminu Gwadabe also backed the IMF on the need to unify the exchange rates. He said: “The exchange rate harmonisation is germane, as transparent and structured exchange rate will lead us to the Promised Land. Lack of exchange rate harmonisation affects transparency in the market. I think the IMF advice on the exchange rate is good and should be  followed”.

    Like Obire, Gwadabe faulted the call for import restriction, saying there was need to continue to localise the economy’s production base. He said more items should be added to the import restriction list to  strengthen the local production base of the economy.

    “We cannot listen to the IMF on this matter of import restriction. We cannot be enriching foreigners at the expense of Nigerians,” he said.

    Besides, the IMF said growth would pick up only slightly to 0.8 per cent in 2017, mostly reflecting some recovery in oil production and a continuing strong performance in agriculture. With oil receipts dominating fiscal revenue and exports, the economy has been hit hard by low oil prices and falling oil production, it said.

    “The country entered into a recession in 2016, with growth contracting by 1.5 per cent. Annual inflation levels doubled to 18.6 per cent, reflecting hikes in electricity and fuel tariffs, a weaker naira and accommodating monetary conditions (broad money expanding at 19 per cent year-on-year),” it said.

    The directors said that even with a significant under-execution in capital spending, the consolidated fiscal deficit increased from 3.5 per cent of Gross Domestic Product (GDP) in 2015 to 4.7 per cent of GDP in 2016, because of significant revenue shortfalls.

    This, they said, resulted over the same period, in a doubling of the Federal Government interest payments-to-revenue ratio to 66 per cent. The external current account turned into a surplus in last year, as import compression continues to offset falling exports.

    The executive directors recognised that the Nigerian economy had been negatively impacted by low oil prices and production. They commended the efforts already made by the authorities to reduce vulnerabilities and enhance resilience, including by increasing fuel prices, raising the monetary policy rate, and allowing the exchange rate to depreciate.

    However, in light of the persisting internal and external challenges, they emphasized that stronger macroeconomic policies are urgently needed to rebuild confidence and foster an economic recovery.

    They welcomed the authorities’ Economic Recovery and Growth Plan (ERGP), which focuses on economic diversification driven by the private sector, and government initiatives to strengthen infrastructure—including the recently adopted power sector recovery plan.

    However, they stressed that without stronger policies, these objectives may not be achieved.

    They emphasised the need for a front-loaded, revenue-based fiscal consolidation starting in 2017, to reduce the Federal Government’s interest payments-to-revenue ratio to sustainable levels. They underscored that priority should be given to increasing non-oil revenue, including through raising Value Added Tax and excise rates, strengthening compliance, and closing loopholes and exemptions.

    The directors stressed the need to contain the fiscal deficit of state and local governments, including through improved transparency and monitoring.

    They also welcomed the steps to strengthen banking sector resilience through stronger prudential requirements. With asset quality declining, they recommended further intensifying bank monitoring, enhancing contingency planning, and strengthening resolution frameworks. Directors encouraged quickly increasing the capital of undercapitalised banks and putting a time limit on regulatory forbearance.

    They also emphasised that ambitious structural reforms are key to achieving a competitive, investment-driven economy that is less dependent on oil. Priority should be given to improving infrastructure, enhancing the business environment, improving access to financing for small enterprises, and strengthening governance and anti-corruption efforts.

    They said timely and effective implementation of these measures would promote sustainable and inclusive growth. They welcomed progress in improving the quality and availability of economic statistics and encouraged further efforts to compile subnational fiscal accounts.

    The IMF said the foreign exchange regime was liberalised in June, last year, but forex restrictions remain in place and the market continues to be characterised by significant distortions that have contributed to a 50 per cent parallel market premium, which was halved following recent increases in central bank interventions and the removal of prioritised allocation of foreign exchange.

    “Under unchanged policies, the outlook remains challenging. Growth would pick up only slightly to 0.8 per cent in 2017, mostly reflecting some recovery in oil production and a continuing strong performance in agriculture. Policy uncertainty, crowding out, and forex market distortions would be expected to drag activity. Accommodative monetary policy would keep inflation in double digits,” the report said.

    They said financing constraints and banks’ risk aversion would crowd out private sector credit and increase the Federal Government’s already high debt service burden.