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Tag: IMF

  • IMF predicts 6% growth for Sub-Saharan Africa

    IMF predicts 6% growth for Sub-Saharan Africa

    … Says, Nigeria’s oil theft hurts growth

    Sub-Saharan Africa’s economic growth is expected to increase to six percent in 2014, from five percent this year, supported by investment in infrastructure and production capacity, the International Monetary Fund (IMF) said on Thursday.

    The IMF had predicted in May that the region would grow 5.7 percent this year and 6.1 percent in 2014.

    It said the slight downward revisions were due mainly to weaker global economic conditions, while budget delays in oil producer Angola and oil theft in Africa’s top crude exporter Nigeria also hurt growth.

    Inflation on the continent is expected to be less than six percent next year, its third year of decline due to benign prospects for food prices and the continuation of prudent monetary policies, the IMF said.

    “The improvement relative to 2013 reflects higher global growth, especially in Europe, and other expected favorable domestic conditions,” the IMF said in its regional report, giving Nigeria’s electricity reforms and hopes of improved oil output there as an example.

    “The main factor behind the continuing underlying growth in most of the region is … strong domestic demand, especially associated with investment in infrastructure and export capacity in many countries,” Reuters quoted the IMF as saying in the report.

    Despite the strong growth outlook, the region remains vulnerable to lower commodity prices and a slowdown in developed and emerging economies, the report said.

    The strongest growth will be felt in mineral-exporting and low-income countries, the IMF said, highlighting examples like the Ivory Coast, the Democratic Republic of Congo, Mozambique and Sierra Leone.

    Africa’s top economy South Africa is expected to grow two percent this year and 2.9 percent in the next, as it lags the broader region due to the relative maturity of its industrial, extractive and services sectors.

     

  • IMF urges Japan to stick to two-stage sales tax hike

    IMF urges Japan to stick to two-stage sales tax hike

    Stocks have fallen, retreating from last week’s record highs and mostly extending their declines after a top Federal Reserve official said the central bank is closer to curbing its bond purchases.

    The losses steepened in early afternoon trading after Richard Fisher, the President of the Federal Reserve Bank of Dallas, said the Fed should cut its massive bond-buying programme next month, unless economic data takes a decided turn for the worse.

    “It’s a minor move in the market because we knew that this was Fisher. If Bullard came out and said this, then that would’ve created a huge move,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

    “It’s a guessing game every day because different speakers have different opinions.”

    While Fisher has held reservations about the Fed’s bond- buying program, St. Louis Fed President James Bullard has said he is not prepared to start reducing the stimulus program, adding that there needs to be more economic data before moving to taper.

    Blue chips were the day’s top decliners, with the Dow Jones industrial average .DJI down 0.4 percent and underperforming the broader market. Shares of The Travelers Companies Inc (TRV.N) and United Technologies Corp (UTX.N) were the Dow’s top decliners. Travellers shares fell 1.1 per cent to $83.07. United Technologies shares slid 1.1 percent to $106.63.

    The Dow Jones industrial average .DJI was down 55.04 points, or 0.35 percent, at 15,603.32. The Standard & Poor’s 500 Index .SPX was down 3.53 points, or 0.21 percent, at 1,706.14. The Nasdaq Composite Index .IXIC was down 1.02 points, or 0.03 percent, at 3,688.57.

    The S&P 500 has risen for five of the past six weeks, gaining more than seven per cent over that period. The index closed at an all-time high on Friday despite a disappointing read on the labor market, which showed that hiring slowed in July.

    Given that advance, further gains may be hard to come by at these levels, especially with the earnings season almost over.

    “After last week with several big market-moving events, this week is probably all about trading sideways. But the market does seem to be in a bullish mood and in the absence of bad news, it will hold these levels and move slowly higher,” said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.

     

    On the earnings front, shares of Tyson Foods (TSN.N) climbed 4.1 percent to $29.68 after giving a full-year revenue outlook that was above expectations.

    In contrast, U.S.-listed shares of HSBC Holdings Plc (HBC.N) fell 4.4 percent to $55.40 after the company reported a drop in revenue, hurt by slower emerging markets.

    Of the 391 companies in the S&P 500 that have reported earnings for the second quarter, 67.8 percent have topped analysts’ expectations, in line with the average beat over the past four quarters, data from Thomson Reuters showed. About 55 percent have reported revenue above estimates, more than in the past four quarters but below the historical average.

    In the latest snapshot of the U.S. services sector, the Institute for Supply Management’s July non-manufacturing index came in at 56, above expectations for a reading of 53 and exceeding the previous month’s level of 52.2. The data had little impact on stocks.

    While the recent payrolls report was weaker than expected, some investors were encouraged that it meant the U.S. Federal Reserve was more likely to hold steady with its monetary stimulus, which has contributed to the S&P 500’s gain of almost 20 percent this year.

    Big tech names like Apple and Facebook supported the Nasdaq. Apple Inc (AAPL.O) shot up 1.5 percent to $469.44. Facebook Inc (FB.O) jumped 2.5 percent to $38.99.

    In the pharmaceutical and biotech sectors, U.S.-listed shares of Compugen Ltd (CGEN.O) soared 47 percent to $8.02 after the company said it would enter into a cancer research partnership with Bayer AG (BAYGn.DE).

     

     

  • IMF, NIA partner on growth

    The International Monetary Fund (IMF) and the Nigerian Insurers Association (NIA) are exploring how to harness the potentials of the industry to boost the economic growth of the country.

    The Director-General of NIA, Sunday Thomas, who made this known in Lagos, said the representatives of the association’s Governing Board led by Prof Joe Irukwu, has met with the representative of the IMF, Dr Rodoyo Wenrhan, to discuss how operators of the industry can maximise value from the enormous insurance potentials in the country.

    Thomas said the parties hope to work out on how to sustain stability on insurance contributions to the economy.

    He said: “The representatives of our Governing Council led by Professor Joe Irukwu, has met with the representative of the IMF, Dr Rodoyo Wenrhan, to explore the potentials of the insurance industry as an economic growth driver in Nigeria.

    “Among the objectives of the mission was to ensure stability is sustained within the system. The representative of the IMF stated that the outcome of the meeting is expected to be published with recommendations made on how to move the insurance industry forward.”

    Th industry is also said to have within the last three years, recorded growth of one million subscribers.

    Commissioner for Insurance Fola Daniel, who made this known, said the number of insured in Nigeria was 500,000 about three years ago, but at present stands at about 1.5 million, out of a population of over 165 million.

    Daniel noted that the Gross Premium Income (GPI) has also increased from N157 million in 2010 to N250 million in 2012, adding that as a result of that, increase in the ratio of premium to Gross Domestic Product (GDP) moved from below 0.5 per cent to nearly one per cent.

    He said increase in local capacity has moved from less than 10 per cent to 48 per cent, adding that the commencement of implementation of Section 50 of the insurance Act 2003 has improved financial assets of operators.

     

  • IMF reduces growth forecasts for Nigeria, global economy

    IMF reduces growth forecasts for Nigeria, global economy

    Nigeria and global economic growths will be lower than previously expected as economies struggle with appreciably weaker domestic and external demand, the International Monetary Fund (IMF) has said.

    In its latest ‘World Economic Outlook (WEO) Update’ entitled ‘Growing Pains’ released yesterday, IMF revised downward growth forecasts for the global economy and all other segments of advanced and emerging economies citing continuing old risks and emerging new downside risks.

    The IMF reduced earlier growth projections for 2013 and 2014 for Sub-Saharan Africa (SSA), contained in its April 2013 WEO, by 0.4 per cent and 0.2 per cent.

    According to the report, growth in sub-Saharan Africa will be weaker, as some of its largest economies including Nigeria and South Africa struggle with domestic problems.

    The report noted that at 5.0 per cent in 2013 and about 5.5 per cent in 2014, growth in emerging market and developing economies is now expected to evolve at a more moderate pace, some one-quarter percentage points slower than in the April 2013 WEO.

    “Global growth is projected to remain subdued at slightly above 3 per cent in 2013, the same as in 2012. This is less than forecast in the April 2013 World Economic Outlook (WEO), driven to a large extent by appreciably weaker domestic demand and slower growth in several key emerging market economies, as well as a more protracted recession in the euro area,” IMF noted.

    It indicated that global growth will recover from slightly above 3.0 per cent in 2013 to 3¾ per cent in 2014, a quarter per cent weaker for both years than the April 2013 projections.

    The report stated that downside risks to global growth prospects still remain dominant pointing out that while old risks remain, new risks have emerged including the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the United States leads to sustained capital flow reversals.

     

     

     

     

    It noted that stronger global growth will require additional policy action, which will require major advanced economies to maintain a supportive macroeconomic policy mix, combined with credible plans for reaching medium-term debt sustainability and reforms to restore balance sheets and credit channels.

    It advised that while many emerging market and developing economies face a tradeoff between macroeconomic policies to support weak activity and those to contain capital outflows, macro prudential and structural reforms can help to reduce the stark consequences of this tradeoff.

    The report underlined the excruciating impact of weak global economy on the emerging market economies with recent increases in advanced economy interest rates and asset price volatility and weaker domestic activity leading to some capital outflows, equity price declines, rising local yields, and currency depreciation. It should be noted that Nigeria’s stock market and forex exchange had witnessed steep declines in June 2013.

    According to IMF, weaker growth prospects and new risks raise new challenges to global growth and employment, and global rebalancing and policymakers everywhere need to increase efforts to ensure robust growth.

    It emphasized that key advanced economies should pursue a policy mix that supports near-term growth, anchored by credible plans for medium-term public debt sustainability and allowance for more gradual near-term fiscal adjustment.

    “With low inflation and sizable economic slack, monetary policy stimulus should continue until the recovery is well established. Potential adverse side-effects should be contained with regulatory and macroprudential policies. Clear communication on the eventual exit from monetary stimulus will help reduce volatility in global financial markets. Further progress in financial sector restructuring and reform is needed to recapitalize and restructure bank balance sheets and improve monetary policy transmission,” the IMF stated.

  • SEC needs more capacity to regulate market, says IMF

    SEC needs more capacity to regulate market, says IMF

    •Urges increased capital for brokers

    The International Monetary Fund (IMF) yesterday released its country assessment of securities regulation in Nigeria, underlining major deficiencies in the structure and operations of the Securities and Exchange Commission (SEC).

    The report titled: “Detailed assessment of implementation of the International Organisation of Securities Commissions (IOSCO) objectives and principles of securities regulation for Nigeria,” noted that though Nigeria’s securities regulatory framework has been strengthened and expanded with the enactment of the Investment and Securities Act (ISA), inherent administrative and operational deficiencies constrain the effectiveness of securities regulation in Nigeria.

    According to the report, while there are comprehensive legal provisions to ensure a robust governance structure for the SEC, it does not have sufficient internal policies, procedures and practices relating to its core functions, deficiencies that jeopardise the proper governance and functioning of SEC.

    It noted that SEC´s independence has improved with the adoption of the ISA, but certain remaining provisions and practices affect its full independence, citing the executive and legislative influences on the decisions of the Commission.

    The report underlined that the mere existence of legal or practical powers on the part of Minister of Finance and the Senate has the potential to undermine the SEC´s independence, if the powers are not transparently used.

    “The overall level of technical expertise in the key functions of the SEC is less than optimal. The SEC has 17 departments and staff of over 630 people, of which only 30 per cent are engaged in the core regulatory and supervisory functions.

    “This proportion has increased over the past few years, but the SEC should focus on increasing it as soon as possible. The coordination in a large organisation such as the SEC is challenging, and the current division of responsibilities between the departments seems to create inefficiencies and overlaps.

    “Without sufficient written procedures to serve as guidance and the less than optimal collaboration between the departments, the SEC´s discharge of its functions falls short of expectations, mainly in the areas of inspections, investigations and enforcement,” IMF stated.

    According to the report, while conduct of business requirements for market intermediaries are largely in place, the regulatory framework is weak in prudential and organizsational requirements, including internal control and risk management.

    “The inadequate regulatory requirements and limited on-site supervision of broker-dealers has the potential of introducing systemic risks to the Nigerian financial system. This was experienced during the crisis, and partially addressed through the more stringent requirements on margin lending introduced by the Central Bank of Nigeria (CBN) and the SEC.

    “Due to the weak financial condition of many broker-dealers and limited ongoing monitoring, new risks may arise and remain unaddressed. As in many countries, the securities settlement system is a potential source of contagion.

    The SEC should promptly implement a major overhaul of the capital requirements applied to broker-dealers, by raising their initial capital requirements and requiring them to maintain sufficient risk-based capital on an ongoing basis,” the report stated.

     

     

     

     

     

     

  • French court questions IMF chief Lagarde

    French court questions IMF chief Lagarde

    International Monetary Fund chief, Christine Lagarde, has arrived at a court in Paris for questioning over a payout to a controversial tycoon during her time as finance minister.

    She is being asked to explain her handling of a row in 2007 which resulted in some 400m euros (£342m; $516m) being paid to Bernard Tapie.

    She is appearing before the Court of Justice of the Republic (CJR), which investigates ministerial misconduct.

    The BBC says the IMF chief insists the award was the best solution at the time.

    On Wednesday she was named by Forbes Magazine as the seventh most powerful woman in the world.

    Today Christine Lagarde was summoned to court – her position weakened by an investigation into corruption.

    The IMF chief is still one of the most popular politicians on the right in France. People like the idea of a French woman playing such a big role on the world stage.

    And after the disgrace that was heaped on the last IMF chief, Dominique Strauss-Kahn, few want to see another prominent French politician embarrassed on the world stage.

    Even the Socialist leader in the Assembly, Bruno Le Roux, appeared ambivalent: “I am only concerned for the taxpayers, but it would not be a desirable thing to happen [speaking of a possible formal investigation] – there are important positions within France to defend, notably within the IMF. Lagarde has a great deal of responsibility that she fulfils extremely well.”

    Supporters say that while Ms Lagarde is currently in the frame, it’s clearly Nicolas Sarkozy who is being targeted, not necessarily by the judges but by the political class.

     

     

  • Nigeria’s poverty rate should be lower, says IMF

    Nigeria’s poverty rate should be lower, says IMF

    THE International Monetary Fund (IMF) has predicted that Nigeria’s poverty rate should be falling faster, given the nation’s economic growth this decade, its official and Senior Resident Representative in Nigeria, W. Scott Rogers, has said.

    Already, figures published by the World Bank have shown that the share of the country’s more than 160 million who are considered poor fell to 62.6 per cent in 2010 from 64.2 per cent in 2004.

    Besides, the economy has also expanded by an average 7.2 per cent a year during the same period, according to IMF estimates.

    “It’s a bit of a conundrum,” Rogers, said in a with Bloomberg Nigeria News. “Income per capita has gone up, yet poverty isn’t improving and we’re having a difficult time understanding why that is, or how that could be.”

    He said economic growth has been largely driven by the non-oil industries, which expanded an average 8.5 per cent a year from 2003 to 2011, citing figures from the Abuja-based National Bureau of Statistics.

    He said while oil accounts for about 15 per cent of the country’s gross domestic product, agriculture accounted for 48.7 per cent of the country’s non-oil economic output from 2001 to 2011, adding that wholesale and retail accounted for 21.4 per cent.

    Agriculture expanded an average 6.6 per cent a year, while wholesale and retail trade grew 12.2 per cent a year, according to the lender.

    “This is one thing we’ve learned over the last decade or two, that it’s not just the rate of growth in the aggregate that matters, it’s where it’s coming from and who’s enjoying it,” said Rogers, adding that “in Nigeria the growth is everywhere.”

    The re-basing of the country’s GDP to a more recent year will probably provide a more accurate picture of the composition of the economy and where growth is coming from, and may help understand why poverty hasn’t reduced by a larger rate in the country, said Rogers. The IMF started providing technical assistance to the statistics office in September on the re-basing exercise, he stated.

    The country’s Gross Domestic Product (GDP) is based on production and consumption patterns in 1990. The statistics bureau will decide before the end of the month whether to use 2010 or 2012 as the new base year, the Head of the agency, Yemi Kale, had said, explaining that the updated data, to be released next year, will probably boost the reported size of the economy, while decreasing the annual rate of growth.

    The IMF has recommended that Nigeria should increase savings in its excess crude account, in which Nigeria saves revenue above a budgeted oil price, and the Sovereign Wealth Fund, to $20 billion, where the savings were in 2008, said Rogers. The Excess Crude Account (ECA) has savings of $7 billion, down from $9.2 billion in January, Finance Minister, Mrs Ngozi Okonjo-Iweala, had said.

    Annual negotiations between lawmakers and the government over what the benchmark price should be aren’t “meaningful” as long as funds that go into the account are spent, said Rogers. The oil price has rarely gone below the set price in the past seven years, and the country should have been accruing savings “the entire time,” he said.

    Lawmakers raised the benchmark oil price in this year’s budget to $79 a barrel from the $75 price proposed by the government.

    Mrs Okonjo-Iweala and the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, said the move would stoke inflation and proposed that the price should be determined in future by a technical committee instead of politicised negotiations.

    “What’s important is that what’s saved is saved until the rule says when” it can be spent, said Rogers.

  • ‘Ignore IMF call to scrap AMCON’

    The National Association of Aircraft Pilots and Engineers (NAAPE) has asked the Federal Government to ignore calls by the International Monetary Fund (IMF) to scrap the Assets Management Corporation of Nigeria (AMCON).

    The body disagreed with IMF’s position that AMCON encourages the accumulation of bad debts, noting that the reason is not cogent enough to call for its scrapping by government.

    According to NAAPE National President, Balami Isaac, the reason given is not only flimsy, but unacceptable, because AMCON has been performing in line with the dictates of its enabling law.

    He said: “AMCON is a special purpose intervention instrument which has been very diligent and most discerning in its assignment, so much so that its activities have been flawless up to date, unlike what we are used to in this part of the world. Secondly, AMCON as we know it, is not a debt forgiveness instrument, but a means of debt re-working. Therefore it would appear that the IMF is crying wolf where there is none.”

    The call by IMF, he maintained, failed to recognise the huge success that AMCON has recorded and the tremendous, almost magical, positive impact it has had on the Nigerian economy.

    “We cannot forget in a hurry how AMCON’s intervention enabled Mainstreet Bank, Keystone Bank and Enterprise Bank to successfully undergo an otherwise painful liquidation exercise, yet have remained in business, even without significant loss of jobs – a novel seamless transition” he said.

    He noted that NAAPE was aware that AMCON has successfully navigated over 200 interventions of debt buy-over across all sectors of the economy.

    Balami pointed out that in the aviation sector, AMCON has spread its operations across 12 airlines with over N132 billion financial involvement, adding that some of these transactions are on-going.

  • IMF calls for quick passage of PIB

    The world’s financial watchdog, International Monetary Fund (IMF) has endorsed the Petroleum Industry Bill (PIB) and called for its quick passage. It said the passage would boost investment, government revenue, and fiscal transparency.

    The IMF, in a Public Information Notice (PIN) released on March 28, called for early passage of the bill saying, “Directors welcomed reforms underway in the energy sector, and looked forward to an early passage of the Petroleum Industry Bill.”

    According to the notice, the IMF said its appraisal followed the conclusion of consultations between its Executive Board and Nigeria under the 2012 Article IV, on February 6, 2013.

    In the notice, the IMF also declared Nigeria’s macroeconomic performance as being “broadly positive over the past year,” despite the fact that “real gross domestic product (GDP) growth is projected to have decelerated slightly to 6.3 percent, reflecting the effects of the nationwide strike in early 2012, floods in the fourth quarter of 2012, and continued security problems in the north.

    It said: “Annual inflation increased from 10.3 percent (end-of-period) in 2011 to 12.3 percent in 2012, owing mainly to the adjustment of administrative prices of fuel and electricity; large increases in import tariffs on rice and wheat; and the impact of floods in Q3.

    “The external position has strengthened and international reserves rose from US$32.6 billion at end-2011 to US$44 billion at end-2012 (5½ months of prospective imports), driven by sustained high oil prices, stricter administration of the gasoline subsidy regime, and strong portfolio inflows.”

    It noted that the country’s fiscal policy stance was tightened in 2012, and fiscal buffers are being rebuilt. “The non-oil primary deficit of the consolidated government is estimated to have narrowed from about 36 percent of non-oil GDP in 2011 to 30.5 percent in 2012, mainly due to expenditure restraint.

    “Monetary policy remained tight in 2012 in response to inflationary pressures. The central bank kept its policy rate unchanged during the year but raised the cash reserve requirement for banks from 8 percent to 12 percent and lowered allowable open foreign exchange position for banks. Financial soundness indicators point to continued improvements in the health of the banking system.

    “In 2013, growth is expected to recover to above 7 percent. Inflation is projected to decline below 10 percent, supported by the tight monetary policy stance and ongoing fiscal consolidation.

    “The key downside risks are a large drop in world oil prices; and slow progress in building consensus around key fiscal reforms,” it added.

    Following these indices, the IMF Executive Directors commended the Federal Government for its “prudent macroeconomic policies that have underpinned a strong economic performance in recent years.”

  • Nigeria’s foreign reserve to hit $80 billion in four years – IMF

    The International Monetary Fund (IMF) says it foresees the Central Bank of Nigeria (CBN) building the nation’s reserves to a high of at least $80 billion in the next four years. IMF Senior Resident Representative, Scott Rogers, says the forecast is based on the fact that Federal Government remains committed to its stated intentions in the medium term expenditure framework as well as IMF’s assumption of single digit inflation going forward.

    The nation’s foreign reserve currently stands at $45.68 billion, a two-year high. The IMF also expects to see foreign exchange inflows to Nigeria rise to about $2 billion in the next two years, buoyed by growth in the oil sector.

    The Fund, however, says the forecasts is only possible if potential threats from insufficient export diversification and a possible weaker portfolio inflows as inflation ebbs and interest rates fall are subdued.