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  • IMF worries over rise in internally displaced persons in Nigeria, others

    the International Monetary Fund (IMF) says it is concerned with the rising numbers of Internally Displaced Persons (IDPs)  in Nigeria and other Sub-Saharan African countries.

    The IMF said this on Friday in Washington DC in its latest Regional Economic Outlook for sub-Saharan Africa report presented by Director of the IMF’s African Department, Mr Abebe Selassie.

    According to the IMF,  the current number of internally displaced persons in the region is five times higher than it was 20 years ago.

    Figures from the report showed that the number of IDPs in the Democratic Republic of the Congo is 4.4 million people, South Sudan 1.9 million and Nigeria 1.7 million.

    Selassie said that economic growth in the Sub-Saharan region was expected to increase from three per cent in 2018 to 3.5 per cent in 2019.

    “Some 21 countries, mainly the region’s more diversified economies, are expected to grow at more than five per cent and see income per capita rise faster than the rest of the world on average over the medium term.

    “However, the remaining countries, comprising mostly resource intensive countries, including the largest, Nigeria and South Africa, are expected to see slower improvements in standards of living.

    “Overall, sub-Saharan African countries need to strike a delicate policy balance between containing public debt levels, investing in human and physical capital and raising revenue.

    “This calls for urgent action on the fiscal front to improve tax revenue collection, public financial management and spending efficiency.

    “On the trade front, countries should reduce non-tariff barriers and deepen intra-trade integration including in the context of the African Continental Free Trade Area,” Selassie said.

    According to the report, growth in Nigeria was 1.9 per cent in 2018 and is expected to reach 2.1 per cent in 2019, driven by recovering oil production and a pickup in the non-oil economy in the aftermath of the election.

    However, the near-term outlook remains subdued as a result of lower oil prices, which have large spillover effects, including to the non-oil sector over the medium term. (NAN)

  • IMF to Nigeria: remove fuel subsidy

    The International Monetary Fund (IMF) yesterday repeated its age-long advice to Nigeria – remove fossil fuel subsidy and deploy savings from the scheme to fix social infrastructure.

    IMF Managing Director Christine Lagarde gave the advice at the opening of the ongoing World Bank/IMF Spring Meetings in Washington DC .

    She urged Nigeria to establish Social protection Safety Net to help the government meet the needs of people at the lower cadre of the society. About $5.2 trillion has so far been sent on fuel subsidies and the consequences thereof, according to her.

    Ms Lagarde said: “I will give you the general principle. For various reasons and as a general principle, we believe that removing fossil fuel subsidies is the right way to go.  And the Fiscal Affairs department has actually identified how much would have been save financially, but also in terms of human life if there had been the right price on carbon emission as of 2015. Numbers are quite staggering. If that was to happen, then there would be more public spending available to build hospitals,  roads, provide educational facilities and lift more people out of poverty.”

    She called for more public spending being made available to build hospitals,  roads, schools and to support education and health for the people. “Now, how this is done is the more complicated path because there has to be a social protection safety net that is in place so that the most exposed in the population do not take the brunt of those removal of subsidies principle.

    Read also: Finance Minister okays IMF advice on subsidy removal

    “So that is the position we take. I would add as a footnote as far as Nigeria is concerned that, with the low revenue mobilisation that exists in the country in terms of tax to Gross Domestic Product (GDP), Nigeria is amongst the lowest. A real effort has to be done in order to maintain a good public finance situation for the country. And in order to direct investment towards health, education, and infrastructure,” she said.

    She spoke of the global economy’s uncertainty, adding that the world was a year ago talking about synchronised growth even as 75 per cent of the global economy was going through that phase.

    On global economic growth, Ms Lagarde said the forecast for this year is 3.3 percent. “But we contend that we are at a delicate moment. And this expected rebound from 3.3 in 2019 to 3.6 in 2020 is precarious and subject to downside risks, ranging from unresolved trade tensions, high debt in some sectors and countries, both public and corporate.”

    On borrowing from China, she said both the World Bank and the IMF were working together to bring about more transparency and be better able to identify debt, terms and conditions, volumes and maturity.

    “And this is an endeavour that we will pursue together and which the G20 has actually asked us to develop. So we are doing that, we are constantly encouraging both borrowers and lenders to align as much as possible with the debt principles that have been approved by the G20 and that we have endorsed internally and developed ourselves.  It is clear that any debt restructuring programmes going forward in the years to come will be more complicated than debt restructuring programmes that were conducted 10 years ago simply because of the multiplicity of lenders and the fact that not all public debt is offered by members of the Paris Club, for instance, which does not mean to say that any debt from a lender outside the Paris Club is an issue as long as the principles are adhered to, the work that we eventually have to do with countries is then facilitated. There is also a myriad of nonpublic lenders that complicates the matter seriously. But that is another story,” she said.

     

  • IMF advises Nigeria to remove fuel subsidies

    The International Monetary Fund (IMF) on Thursday advised Nigeria to remove fossil fuel subsidy and deploy savings from the scheme to fix social infrastructure.

    IMF Managing Director, Christine Lagarde gave the advice during the opening ceremony at the ongoing World Bank/IMF Spring Meetings in Washington DC.

    She urged Nigeria to establish Social protection Safety Net to help government meet the needs of people at the lower cadre of the society, saying about $5.2 trillion has so far been sent on fuel subsidies and the consequences thereof.

    She said: “I will give you the general principle. For various reasons and as a general principle, we believe that removing fossil fuel subsidies is the right way to go.

    “And the Fiscal Affairs department has actually identified, how much would have been saves financially, but also in terms of human life if there had been the right price on carbon emission as of 2015. Numbers are quite staggering.

    “If that was to happen, then there would be more public spending available to build hospitals, roads, provide educational facilities and lift more people out of poverty”.

    Read also: IMF cautions Nigeria against borrowing from China

    Ms. Lagarde called for more public spending being made available to build hospitals, roads, schools and to support education and health for the people.

    “Now, how this is done is the more complicated path because there has to be a social protection safety net that is in place so that the most exposed in the population do not take the brunt of those removal of subsidies principle.

    “So that is the position we take. I would add as a footnote as far as Nigeria is concerned that, with the low revenue mobilisation that exists in the country in terms of tax to Gross Domestic Product (GDP), Nigeria is amongst the lowest.

    “A real effort has to be done in order to maintain a good public finance situation for the country. And in order to direct investment towards health, education, and infrastructure,” she said.

    She said the global economy is also currently quite uncertain, adding the world was a year ago talking about synchronized growth and that 75 per cent of the global economy was going through that phase.

    On global economic growth, she said the forecast for this year is 3.3 percent.

    “But we contend that we are at a delicate moment. And this expected rebound from 3.3 in 2019 to 3.6 in 2020 is precarious and subject to downside risks, ranging from unresolved trade tensions, high debt in some sectors and countries, both public and corporate.”

    On borrowing from China, she said both the World Bank and the IMF are working together to bring about more transparency and be better able to identify debt, terms and conditions, volumes and maturity.

  • US, China trade war bad for Nigeria, others, says IMF

    Nigeria and other emerging market economies highly dependent on crude oil and other commodities will be adversely affected by the trade tension between the United States and China, the International Monetary Fund (IMF) has said.

    IMF’s Chief Economist, Ms. Gita  Gopinath, said the trade tension is affecting global oil prices – Nigeria earns over 95 per cent of its foreign exchange from oil – but, in her view,  that hope exists as both the US and China are  resolving the challenge in their ongoing trade negotiations.

    Ms. Gopinath, who addressed the media  on the  World Economic Outlook (WEO) at the ongoing World Bank/ IMF Spring Meetings in Washington DC yesterday, said: “There is a need for greater multilateral cooperation to resolve trade conflicts to address climate change and risks from cybersecurity and to improve the effectiveness of international taxation.”

    She said the talks between the US and China were showning positive signs, such as China’s commitment to reducing tariffs on US auto imports.

    According to Ms. Gopinath, who is also IMF’s Director of Research, global growth is projected to slow  from 3.6 per cent in 2018 to 3.3 per cent in 2019, before returning to 3.6 per cent in 2020 if risks are mitigated. This is lower than  the 3.5 percent predicted in January’s edition of the quarterly report, which has been a cut from 3.7 percent; 2020 should see 3.6 percent growth if risks are mitigated, she said.

    The fund she said growth for last year  was revised downward by 0.1 percentage point, relative to the October 2018 World Economic Outlook , reflecting weakness in the second half of the year, with forecasts for 2019 and 2020 now marked down by 0.4 percentage point and 0.1 percentage point.

    Read also: IMF: growth for commodity exporters weighed down in Nigeria, Angola

    The forecast envisaged that global growth will level off in the first half of this year and firm up after that. Besides, despite the challenge presented by the trade war, the  improved momentum for Nigeria and other emerging and developing economies is projected to continue in 2020.

    By contrast, activity in advanced economies is projected to continue to slow gradually as the impact of US fiscal stimulus fades. By 2020, the global growth trajectory is expected to rise to about 3.6 per cent over the medium term, sustained by increase in the relative size of the economies of China and India, which will experience more growth than emerging economies within the year.

    The Fund warned that the ongoing trade tensions between the U.S and its trading partners are contributing to a slowdown in the global economy.

    The U.S is accusing China of not playing fair on its exports,  such as steel, which it claims is a heavily subsidised industry in China, and also allows intellectual property theft from American firms.

     

     

  • Ahmed, Emefiele join experts at IMF/World Bank meeting

    The Minister of Finance, Mrs Zainab Ahmed and the Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele, will join other economic experts from around the world to discuss issues affecting global economy in Washington DC, U.S.

    The News Agency of Nigeria (NAN) reports that the discussions are scheduled to hold between April 9 and April 14, under the auspices of the World Bank Group and the International Monetary Fund (IMF) in Washington DC.

    The 2019 Spring Meetings of the IMF and the World Bank is expected to bring together central bank governors, ministers of finance, parliamentarians, private sector executives, representatives from civil society organisations and the academia.

    The experts will discuss issues of global concern, including the world economic outlook, poverty eradication, economic development and aid effectiveness.

    The meeting will also feature seminars, regional briefings, press conferences and many other events with focus on global economy, international development and the world’s financial system.

    NAN reports that Nigeria attends the meeting each year because of the quantum of investments and technical support it receives from both the IMF and the World Bank.

    Although Nigeria currently has zero loans with the IMF, it enjoys technical support from the organisation.

    The World Bank Group on the other hand is helping to fight poverty and improve living standards in the country through 33 Core Knowledge Product Reports and 29 ongoing National and Regional projects.

    This is in addition to about 60 Trust Funds.

    The World Bank Group since 1958, has supported Nigeria with loans and International Development Association (IDA) credits worth about 14.2 billion dollars.

    The group in 2017 fiscal year alone committed 1.51 billion dollars to Nigeria, 2.58 billion dollars in 2018 and in 2019; it has already committed 20 million dollars on different development projects across the country.

    Read Also: Buhari calls for safe, inclusive digital world

    Some of the projects are on nutrition, polio eradication, conflict monitoring, electrification, erosion, education, economic transformation, promoting fiscal transparency and accountability in states.

    Meanwhile, the Executive Directors of the World Bank on Friday unanimously selected David Malpass as President of the World Bank Group for a five-year term, effective Tuesday.

    Earlier in his career, Malpass served as the U.S. Deputy Assistant Secretary of the Treasury for Developing Nations and Deputy Assistant Secretary of State for Latin American Economic Affairs.

  • IMF: economy on right track

    The International Monetary Fund (IMF) has expressed a renewed confidence in the Nigerian economy.

    Its Executive Directors also hailed the economy’s  recovery signs, such as  reduced inflation and strengthened reserve buffers.

    According to its Media Chief for Africa, Lucie Mboto Fouda, in a statement yesterday, IMF noted that Nigeria’s real Gross Domestic Product (GDP) increased by 1.9 per cent in 2018, up from 0.8 per cent in 2017.

    ”This is on the back of improvements in manufacturing and services, supported by spillovers from higher oil prices, ongoing convergence in exchange rates and strides to improve the business environment,” the IMF said.

    It said the headline inflation fell to 11.4 per cent at end of 2018, reflecting declining food price inflation and weak consumer demand.

    The Fund also reflects a relatively stable exchange rate and tight monetary policy during most of 2018, but remains outside of the central bank’s target range of 6-9 per cent.

    IMF also noted that record holdings of mostly short-term local debt and equity and a current account surplus lifted gross international reserves to a peak in April 2018.

    The Fund pointed out that persisting structural and policy challenges continue to constrain growth to levels below those needed to reduce vulnerabilities, lessen poverty and improve weak human development outcomes, such as in health and education.

    It said: “A large infrastructure gap, low revenue mobilisation, governance and institutional weaknesses, continued foreign exchange restrictions, and banking sector vulnerabilities are dampening long-term foreign and domestic investment and keeping the economy reliant on volatile oil prices and production.

    “Under the current policies, the outlook remains therefore muted. Over the medium term, absent strong reforms, growth would hover around 2½ per cent, implying no per capita growth as the economy faces limited increases in oil production and insufficient adjustment four years after the oil price shock.

    “Monetary policy focussed on exchange rate stability would help contain inflation, but worsen competitiveness if greater flexibility is not accommodated when needed.

    “High financing costs, on the back of little fiscal adjustment, would continue to constrain private sector credit, and the interest-to-revenue ratio would remain high.

    “Risks are moderately tilted downwards. On the upside, oil prices could rise, prompted by global political disruptions or supply bottlenecks.

    “Bold reform efforts, following the election cycle, could boost confidence and investments, especially given relatively conservative baseline projections.”

    Also, in the statement, the Executive Directors of the Fund welcomed Nigeria’s ongoing economic recovery, accompanied by reduced inflation and strengthened reserve buffers.

    They, however, noted that the medium-term outlook remains muted, with risks tilted to the downside.

    “In addition, long standing structural and policy challenges need to be tackled more decisively to reduce vulnerabilities, raise per capita growth, and bring down poverty,’’ the directors said.

    They urged the Federal Government to redouble its reform efforts and supported the country’s intention to accelerate implementation of the Economic Recovery and Growth Plan.

    The executive directors stressed the need for revenue-based consolidation to lower the ratio of interest payments to revenue and make room for priority expenditure.

    They welcomed the authorities’ tax reform plan to increase non-oil revenue, including through tax policy and administration measures.

    In statement, they stressed the importance of strengthening domestic revenue mobilisation, including through additional excises, a comprehensive VAT reform, and elimination of tax incentives.

    They said that securing oil revenues through reforms of state owned enterprises and measures to improve the governance of the oil sector would also be crucial.

    The directors highlighted the importance of shifting the expenditure mix toward priority areas.

    In this context, they welcomed the significant increase in public investment, but underlined the need for greater investment efficiency.

  • IMF backs tax exemptions reforms

    The International Monetary Fund (IMF) is backing government to overhaul its tax exemptions regime to boost its failing domestic revenue.

    The Washington-based lender, in its latest review of Ghana’s ongoing bailout programme, said rationalising tax exemptions will improve government’s domestic revenue mobilisation.

    Domestic revenue performance over the past two-three years has not met the budgeted estimates, with last year’s target falling short by about 10 percent and prompting government to realign its expenditure in view of the shortfall.

    “…it was agreed that tax exemptions will be rationalised, and their management framework strengthened to improve domestic revenue mobilisation. The authorities estimate tax exemption costs to be as much as 1.6 percent of GDP in 2018,” said Ms. Annalisa Fedelino who led an IMF team to Accra to conclude discussions on the combined seventh and eighth reviews of Ghana’s Extended Credit Facility Programme.

    The president in last week’s State of the Nation Address described the existing tax exemption policy as an Achilles-heel, and a growing menace to fiscal stability and revenue generation.

    In the last eight years, tax exemptions in respect of import duty, import VAT, import NHIL and domestic VAT have grown from three hundred and ninety-two million Ghana cedis (GH¢392million), that is 0.6% of GDP in 2010, to GH¢4.66 billion – 1.6% of GDP in 2018.

     

     

    According to the president, this is not sustainable and government intends to do something about it to reverse the trend – by introducing suitable measures that may disrupt the easy and comfortable arrangements many have become accustomed to.

    The IMF mission team said government has made good progress in implementing the ECF-supported program, which will end on April 3, 2019; adding that six out of nine end-December 2018 quantitative targets under the program were met and structural reforms are advancing.

    It went further to describe Ghana’s recent economic performance as favourable, despite a less supportive external environment for frontier economies.

    Real GDP grew by 6.7 percent in the first three quarters of 2018. Over the medium-term, growth is projected to remain sustained – buttressed by recent oil discoveries while consumer price inflation, now at 9.0 percent, is well within the band around the inflation target.

    The overall fiscal deficit reached 3.7 percent of the rebased GDP (excluding financial sector costs), and the primary surplus (overall budget balance excluding interest costs) was in line with programme targets.

    The team noted that the economy experienced some pressures in the second half of 2018, largely emanating from foreign investors rebalancing their portfolios in the context of a stronger dollar, rising US interest rates, and volatility in emerging markets – which led to a decline in external buffers.

    The team urged that the monetary policy should continue to remain prudent and complement fiscal adjustment efforts to keep underlying inflationary pressures in check and avoid upside surprises.

    The IMF’s Executive Board is expected to consider the combined seventh and eighth ECF reviews by end-March 2019. Completion of these reviews will make available about $188million, bringing total disbursements under the programme to about $920.58million.

  • IMF cuts global economic growth forecast to 3.5%

    The International Monetary Fund (IMF) yesterday cut its estimates for global growth, warning that the expansion seen in recent years is losing momentum.

    The Fund now projects a 3.5 per cent growth rate worldwide for 2019 and 3.6 per cent for 2020. These are 0.2 and 0.1 percentage points below its last forecasts in October — making it the second downturn revision in three months.

    Speaking at the World Economic Forum in Davos, the IMF’s Managing Director Christine Lagarde said: “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising. But even as the economy continues to move ahead … it is facing significantly higher risks.”

    In October, the IMF cut its global growth forecasts on the back of increased trade tariffs between China and the United States. It said the latest revision is due in part to carry over from last year, mentioning weakness for German auto manufacturers due to new fuel emission standards, and soft domestic demand in Italy after recent sovereign and financial risks. But the IMF also highlighted weakening sentiment in the global financial markets and a contraction in Turkey that’s now projected to be deeper than anticipated.

    According to the Fund, advanced economies have been on a declining path in terms of growth and this is taking place more rapidly than previously thought. These countries are forecast to grow 2 percent this year and 1.7 percent in 2020.

    At the same time, there’s also been a growth slowdown in emerging economies. The IMF projects a 4.5 percent growth rate in 2019, from 4.6 percent in 2018, before improving to 4.9 percent in 2020.

    There are also a number of flash-points that could lead to even lower growth trajectories across the world, the IMF added in its new report.

  • IMF: Nigeria, other African economies to grow 3.8%

    The economies of Nigeria and other sub-Saharan Africa countries will be home to several of the world’s fastest-growing economies this year, the International Monetary Fund (IMF) said yesterday. The region, it said, is expected to have overall economic growth of 3.8 per cent, on par with the global forecast of 3.7 per cent.

    But the region’s growth numbers will be led again by Ethiopia, Rwanda, Ghana, Côte d’Ivoire, Senegal, Benin, Kenya, Uganda, and Burkina Faso which remain in the top 10. Tanzania joins that group this year, replacing Guinea, according to CGTN.

    That growth is driven by the steady rebound of commodity prices, an improvement in the global economy and improved capital market access after several of the countries made valiant attempts to get their fiscal books in order following the commodity price slump of 2014-15.

    But those numbers would be even better were it not for the underwhelming projections from the continent’s big two: Nigeria and South Africa. Both are recovering from a pretty tough 2018 and both have presidential elections this year.

    Nigeria is expected to see an expansion of 2.3 per cent—better, but not much, than the 1.9 per cent of 2018. South Africa will expand by 1.4 per cent which is, again, an improvement on 0.8 per cent last year, but nothing to cheer about. As Washington DC think-tank, Brookings, noted in this year’s Foresight Africa report, that kind of growth doesn’t look great up against 2.5 per cent annual population growth.

    “If you leave out the big two and Angola, aggregate growth for sub-Saharan Africa rises to 5.7 per cent for 2019. About half of the world’s fastest-growing economies will be located on the continent, with 20 economies expanding at an average rate of five per cent or higher over the next five years, faster than the 3.6 per cent rate for the global economy,” Director of Brookings’ Africa Growth Initiative, Brahima Coulibaly, said.

    He however, said the elephant in the room must be addressed when it comes to African economies this year and that is, of course, rising debt.

    “We’re coming to the end of a decade of cheap debt which some African countries piled on in the latter half of that decade. There’s a real risk, with the likelihood of global recession in 2020, commodity prices will fall as demand drops. Several African countries might struggle to manage their debt servicing—especially if interest rates continue to rise.

    “At least” 14 countries are either in debt distress or at high risk of debt distress up from six countries just five years earlier. These countries currently have total debt of around $160 billion, of which $90 billion is external debt,” Brookings said.

    As we’ve written in the past, Africa’s growing debt is a ticking time bomb. The average debt to GDP ratio rose to 57 per cent in 2017 and has hit extremes in countries including Cape Verde, Eritrea, Congo Brazzaville and Mozambique where it exceeds 100 per cent of GDP.

    As the global economic environment changes updating debt management strategies should be a priority for African policymakers in 2019, and they’ll need “to take bold steps to strengthen governance around tax revenue collection.”

  • IMF: Lagos will grow by 4% to $136b in 2019

    Lagos State economy would grow by four per cent in 2019, the Governor, Akinwunmi Ambode, said.

    Ambode, who spoke at separate meetings on Tuesday in an address he delivered to the state’s foremost social clubs – the Yoruba Tennis Club and Island Club, said “Lagos on a stand-alone basis in the year under reference, would achieve four per cent growth in its GDP, which is currently valued at $136 billion.”

    The governor, who echoed the IMF’s (International Monetary Fund’s (IMF’s) forecast, said the state’s growth projection will exceed that at the federal level.

    He said: “With its Gross Domestic Product (GDP) currently standing at $136 billion, Lagos economy will record four per cent growth in 2019, while the national economy will grow by 2.8 per cent, the International Monetary Fund (IMF) has predicted.

    Unlike the national economy, Ambode pointed out that the social intervention initiatives of its administration would also go a long way to facilitate reduction in unemployment rate, saying the 2019 economic outlook was quite positive.

    In his words: “According to IMF, the Nigeria GDP will grow from 1.9 per cent in 2018 to 2.8 per cent in 2019. Lagos on a stand-alone basis will achieve over four per cent growth in GDP. By implication, this could be more if the congestion at the port and the negative effect this has on the economy is addressed.”

    Ambode, whose speech  was witnessed, among others by former Commissioner for Works, Alhaji Femi Okunnu; Chairman, Yoruba Tennis Club, Prof. Adetokunbo Fabanwo; his Island Club counterpart, . Olabanji Oladapo and the governorship candidate of the All Progressives Congress (APC) in the state,  Babajide Sanwo-Olu, said the state’s 2019 budget will be dedicated towards the completion of ongoing infrastructure projects, creation of more jobs, supporting businesses to thrive, and strengthening the security architecture of the state.

    He recalled the activities of his administration in the last three and a half years, saying that it was particularly fulfilling that the state has made tremendous progress in all sectors of the economy and has become more globally competitive and strategically positioned among the major city-states worldwide.

    Read also: LCCI: Economy grows lower than IMF’s, ERGP’s projections

    “Three and a half years down the line, our state has progressed in all sectors of the economy. We have charted a clear path to the destination we have all dreamt about and desired.

    According to Bloomberg Ambode said: ‘Today, our Lagos has become more globally competitive and strategically positioned among the major city-states of the world. Our state has become a top destination for business and tourism and it can only get better

    “We have undertaken projects in all sectors of the economy with the sole intention of making life better for our people. All of these and similar initiatives were made possible by the personal taxes of high net worth residents of our state represented at this gathering which account for a significant percentage of our IGR. I want to use this opportunity to thank you so much for providing the resources, which have empowered us to make a positive difference in the lives of all citizens of our state,” Ambode stated