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  • Global debt hits $180trn, says IMF

    REBUILD buffers and reverse pro-cyclical fiscal policies, emerging-markets and low-income countries have been warned by the International Monetary Fund (IMF).

    The warning came after the IMF put the global debt at $180 trillion.

    In a statement issued at the conclusion of the Group of 20 (G-20) Summit in Buenos Aires, the Funds Managing Director, Ms. Christine Lagarde, called for collaborative action by G-20 leaders as global growth moderates and risks increased.

    Ms. Lagarde, who stated that global growth remained strong, but that it was moderating and becoming more uneven.

    She said pressures on emerging markets had been rising and trade tensions have begun to have a negative impact, increasing downside risks.

    The IMF chief said: “Another urgent issue is the excessive level of global debt – about $182 trillion by the IMF’s estimate.

    “It is important, particularly for highly indebted emerging-market and low-income countries, to rebuild buffers and reverse pro-cyclical fiscal policies.

    “Increasing debt transparency, such as on the volumes and terms of loans, by borrowers as well as lenders, is as important as supporting debt sustainability.’’

    “Choosing the right policy is, therefore, critical for individual economies, the global economy, and for people everywhere. The choice is especially stark regarding trade.

    “We estimate that if recently raised and threatened tariffs were to remain in place and announced tariffs were implemented, about three-quarters of one per cent of global Group Domestic Product (GDP) could be lost by 2020.

    “If instead, trade restrictions in services were reduced by 15 per cent, global GDP could be higher by one-half of one per cent.

    “The choice is clear: there is an urgent need to de-escalate trade tensions, reverse recent tariff increases, and modernise the rules-based multilateral trade system.’’

    To meet the challenges facing the global economy, the IMF chief made several policy recommendations to the G-20 leaders.

    They included: “First, fix trade – this is priority number one to boost growth and jobs.

    “Continue to normalise monetary policy in a well-communicated, gradual, data-driven manner and with due regard to potential spill-over effects.

    “Address financial risks, using micro and macro-prudential tools to tackle problems related to the leveraged ending, deteriorating credit quality and high exposure to foreign currency or foreign-owned debt.

    “Use exchange rate flexibility to mitigate external pressures, avoiding tariffs and other policies that could weaken market confidence.

    “Finally, eliminate legal obstacles to the participation of women in the economy which is key to tackling high and persistent inequality and would add to the growth potential of all G-20 countries.’’

    Ms. Lagarde said she was encouraged by the G-20’s continued commitment to strengthening the global financial safety net, with a strong and adequately financed IMF at its centre.

    “It is important that the G-20 leaders have pledged to conclude the 15th General Review of Quotas by our Spring Meetings and no later than the Annual Meetings in 2019,” she noted.

  • IMF warns Nigeria on debt service  

    The International Monetary Fund (IMF) has cautioned the Federal Government  to be mindful of the country’s rising debt service to revenue ratio and take steps to mitigate the situation.

    IMF Senior Resident Representative in Nigeria Mr. Amine Mati yesterday issued the warning in Abuja at the public presentation of the “Regional Economic outlook: Sub-Saharan Africa, Capital Flows and the Future of Work.”

    He predicted that Nigeria’s economy will grow by 1.9 per cent this year, up from 0.8 per cent in 2017.

    This, according to him, is due to fewer disruptions in oil production

    Mati attributed the expected growth to some pick-up in the non-oil. According to him, “the recovery is expected to contribute about 0.7 percentage points to the region’s average growth in 2018 and lift activity in Nigeria’s trading partners through stronger remittances, financial spillovers and import demand.”

    Mati lamented that public debt was diverting more resources towards interests payments, and cautioned that though Nigeria’s debt to GDP was quite low, over 50 per cent of the country’s revenue went into interest payments.

    He suggested that increase in revenue was very important to bridge the gap in order to ensure that revenue to GDP was sufficient enough to pay up and service the debt profitably.

    According to Mati, “Nigeria’s Debt /GDP ratio at between 20-25 per cent is quite low but debt servicing which takes about 50 per cent of revenue is certainly high”.

    With regards to Sub-Sahara Africa, Mati said that the regional average was worse than the Nigerian scenario with Debt/GDP across Sub-Saharan Africa ranging between 35-57 in the past five years. He noted that “a lot more of the resources are going into paying interests and there is less to spend on capital expenditure.”

    Going forward, the solution the IMF chief said was for massive revenue to be mobilized to address the challenge but African nations especially Nigeria were not doing enough in that regard. Sub-Sahara’s strategy he queried has been to cut expenditure, rather than mobilizing more revenue.

    According to him though Nigeria has immense revenue potentials many of which have remained untapped, “adjustment has relied on spending compression rather than revenue mobilization.”

    The IMF Senior Resident Representative noted that as the magnitude of capital flows to the region increased, so also the volatility increased. According to him, “portfolio inflows could be very volatile and more associated with consumption than investment in the real sectors of the economy.”

    Mr Nnanna Okwu, Deputy Governor, Economic Policy of the Central Bank of Nigeria (CBN) who was represented by Mr Friday Ogwuche said capital inflows into Nigeria responds to both domestic and external shocks. He said Foreign Direct Investments (FDIs), inflows were becoming more diversified in response to the changing structure of the Nigerian economy.

    He also said that there were certain factors shaping capital inflow behaviour in recent times, adding that, high oil prices and growth in external reserves provides confidence for capital inflows into the country.

    He also said that tepid recovery from recession and relatively stable macroeconomic environment provided impetus for capital inflows back to Nigeria between 2017 and 2018.

    ”Also, uncertain political environment as a result of the 2019 general elections is a source of concern for foreign investors and may have influenced capital reversal in recent months” he said.

    Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, said the organisation was working towards focusing more on foreign exchange risks strategy, especially with the rising interest rates in the United States and other advanced economies.

    Commenting on the fears raised in some quarters regarding exchange rate risks on the nation’s external borrowings if the value of the Naira falls in relation to the dollar, “before, the share of the external debt was small, oil prices were good, production was good so, really, there is no need to be worried.”

    However, she called for focus stressing that “In the new Strategy Plan we have, there is huge focus on risks. Portfolio risks, contingent liability risks, interests risks. Before we were not focused on risk management.  We have even asked for assistance from the IMF, from the US Treasury.”

     

  • Eight African countries in debt distress, says IMF

    The International Monetary Fund (IMF), has categorised eight African  countries as being  in debt distress, the Director, African Department at the IMF, Abebe Selassie, has said.

    Selassie, who addressed over a thousand participants at a special session on African development at the on-going  2018 International Monetary Fund (IMF)/ World Bank Group Meetings in Bali, Indonesia, said  African debt trap was fast becoming a heavy burden as all growth indicators are pointing downwards.

    Selassie, who shied away from naming the affected countries, pointed to most of the oil exporting countries in Africa as being engrossed in the ensuing quagmire. Among oil producing countries in Africa, are Angola, Ghana, South Sudan, Nigeria, Libya and Niger, among others.

    He criticised Nigeria’s foreign exchange regime ,describing it as retrogressive in view of the global practice where rates are now flexible in response to the dynamics of the global economy.

    Nigeria’s Budget and Planning Minister, Senator Udo Udoma, said due to some oil production challenges in Q2 2018, which he claimed are being resolved  and reduced agricultural output, which he also hinged on some local communal conflicts between herdsmen and farmers, as well as flooding in the agricultural belt, in his words, “we have had to reduce our own projections to 2.1 per cent, assuring that action was being taken to resolve these challenges.

    He said given IMF’s growth projection for Nigeria this year of 1.9 per cent (which is slightly lower than ours) from the  low of 0.8 per cent in 2017, “that is a significant improvement on the 2017 numbers,” stressing that given that development, “the direction of movement in Nigeria is clearly very positive.”

     

     

    Senator Udoma said Nigeria pulled itself out of a recession that occurred following the collapse of crude oil prices from 2014. He said the Federal Government responded by developing a robust Medium-Term Plan – the Economic Recovery and Growth Plan for 2017 to 2020  which was launched in early 2017. He said the Plan focuses on five strategic areas, including Macroeconomic Stability, Economic Diversification and Growth Drivers, Competitiveness, Social Inclusion and Jobs, as well as Governance and other enablers.

  • 26m women may lose jobs to technology, IMF warns

    About 26 million female jobs in 30 countries are at risk of being displaced by technology, the International Monetary Fund (IMF) has warned.

    The IMF in its report, “Gender, Technology and the Future Work”, said globally, 11 per cent of women were at risk of losing their jobs due to advances in computer technology, while only four per cent of the male population faced the same risk.

    The IMF President, Ms Christine Lagarde, made this known on Tuesday at a panel discussion on “Empowering Women in the Workplace” at the IMF/World Bank Annual Meetings in Bali, Indonesia.

    Lagarde said: “Less well-educated and older female workers aged 40 and above, as well as those in low-skill clerical, service, and sales positions are disproportionately exposed to automation.

    “Extrapolating our results, we find that around 180 million female jobs are at high risk of being displaced globally.

    “Therefore, policies are needed to endow women with required skills, close gender gaps in leadership positions and bridge digital gender divide that could confer greater flexibility in work, benefiting women.”

    Also, the Indonesian Minister of Finance, Mrs. Mulyani Indrawati, said adding more women into the labour force of an economy would reduce poverty and ensure prosperity.

    She urged women to be role models at their places of work. “As women, we must strive to do extraordinarily well in other to set example for the younger generation.

    “We also need to ensure girls have the right role models and mentors so they can really be the ones leading the way,” she said.

    The Executive Secretary, United Nations Economic Commission for Africa, Mrs. Vera Songwe, also said increased access to the Internet would bridge women’s skill gap.

    “250 million fewer women than men in 2017 had access to the Internet. In Africa, 27 million fewer women access reliable and affordable Internet, which will help close the current digital divide,” Songwe said.

    She also said higher female labour force participation could boost economic growth of a country. “Creating more and better opportunities for women to engage in paid work and a greater ability to control their income and assets can also contribute to stronger economic growth in emerging market and low-income economies,” she stated.

  • IMF urges Nigeria to increase non-oil revenue

    The International Monetary Fund (IMF) has advised Nigeria to explore ways of increasing its revenue outside its traditional base of oil proceeds.

    The IMF’s Deputy Director, Fiscal Affairs Department, Paulo Mauro, who made the call at a press briefing at the on-going 2018  IMF/World Bank Meetings in Bali, Indonesia, admitted that there is an issue of how  to increase Nigeria’s revenue base, pointing out that the matter was not only crucial, but of utmost priority.

    Mauro, who was responding to a question on what strategy Nigeria should adopt to increase its revenue profile, said increasing the nation’s non-oil revenue was crucial, adding that way, more resources will be generated to fix infrastructure and attend to social spending.

    ”Indeed, we do see this – increasing non-oil revenues —  as a crucial priority for the country.  If one looks at the ratio of interest payments-to-revenues for Nigeria, that is quite high. And certainly, increasing revenues is the way in which one creates the space to do social spending, infrastructure, and other types of spending that benefit economic growth. So clearly, that is a priority.”

    Stressing the need for increased revenue, Mauro also offered tips on how Nigeria could  achieve the goal, saying the IMF has been discussing with the country some of the issues.

    He said: “We have been discussing over the years with the government, and we see the priorities in tax administration, but there are also aspects of tax policy that would help. So, certainly, in the tax administration, to increase the compliance rate, something that could be done is to increase tax audits and to use e filing to a greater extent. There are data matching exercises that can be conducted.”

    He called for strategies to curtail tax evasion and reduction in corrupt tendencies. ”So generally trying to reduce tax evasion and  possibly corruption as well, those would be priorities on the tax administration side,” Mauro pointed out.

    The IMF official said the Fund had earlier prompted the government to tinker with Excise taxes on tobacco and alcohol, a policy the government rolled out earlier, but which is under review.

    “Stamp duties is something that can be looked at again,” Mauro said.

    He said while efforts are on to increase revenue, attention should also be focused on how the proceeds are deployed. His words: “I think it is not just the revenue side; it is also the spending side. Clearly, improving the choices that one makes on which infrastructure projects, how does one go about selecting the ones that are really going to boost growth. So, I think, definitely, it is a priority to increase revenues, but also to be careful about  the ways in which we can make spending more efficient,” he stated.

    The Federal Government has stepped up its revenue generation through taxation.

    The 2018 half year revenue performance report of the Federal Inland Revenue Service (FIRS) shows that tax revenue improved by 42 per cent.

    The FIRS also said it had raised the tax-to-GDP contribution by 20 per cent.

    On debts, the IMF’s Senior Communications Officer, in the Communication’s Department, Andreas Adrian, said  there has been an increase in countries that issue debts in the  international capital markets, including Sub-Saharan countries, a development he said was good for infrastructural financing, but nevertheless cautioned that it has its attendant consequences.

    He said: “It is good for development to be able to participate in international capital markets to fund things like infrastructure projects and to sustain investment in countries.”

    To Adrian, however, “international borrowing has to be balanced with stability objectives, and so countries have to make sure that the level of borrowing is sustainable in the long run so that the country can pay back the debt and the interest rates on the debt even if times get worse at some point”.

    He said  in the case of Nigeria,  the rise in oil prices is sustaining economic activity, but oil exporter,” pointing out that oil prices could decline at some point, and so it is important to have some constraint on how much debt is issued.

    “As a matter of fact, when you look at debt issuance of Sub-Saharan African countries, we do see a sharp slowdown in issuance in recent months. As financial conditions for emerging markets have tightened, financial conditions also have tightened for Sub-Saharan African countries, and there is some slowdown in the debt, and so it might be that we see less issuance going forward.

    “Of course, there is going to be quite a bit of need for rollover of debt in 2020 through 2022 in particular. There is quite a bit of debt that is going to come due, so there will be rollover, and hopefully international capital markets will allow that rollover in a smooth fashion,” Adrian said.

     

  • Oil dips to $84.75, as IMF cuts down outlook

    Brent crude prices, yesterday, slipped to $84.75 per barrel, following the decision by the International Monetary Fund (IMF) to lower its growth forecasts.

    Benchmark Brent crude was down 25 cents at $84.75 a barrel by 0735 GMT after a 1.3 per cent gain on Tuesday. US light crude was 25 cents lower at $74.71

    The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019(two days ago) Tuesday, raising concerns that demand for oil products may slump as well.

    However, markets were supported as Hurricane Michael moved towards Florida causing the shutdown o of nearly 40 per cent of US Gulf of Mexico crude production.

    Trade tensions and rising import tariffs are taking a toll on international commerce, while emerging markets struggle with tighter financial conditions a ..

    “Prices are peaking at the most opportunistic time given the waning global growth narrative,” said Stephen Innes, head of trading APAC at OANDA in Singapore.

     

    In the United States, nearly 40 per cent of daily crude oil production was lost from offshore US Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael.

    Michael has strengthened into an “extremely dangerous” Category 4 hurricane, according to the latest advisory from the US National Hurricane Center.

    Oil producers evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday on the Florida Panhandle.

     

    The country’s largest privately owned crude terminal, the Louisiana Offshore Oil Port, said late on Tuesday it halted operations at its marine terminal.

     

    The facility is the only US port able to fully load and unload tankers with a capacity of 2 million barrels of oil.

     

    Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement.

     

     

  • IMF to Nigeria: increase non-oil revenue

    · Says ratio of interest payments-to-revenues high

     

    The International Monetary Fund ( IMF ), has called on Nigeria to explore ways of increasing its revenue outside its traditional base of oil proceeds.

    The IMF’s Deputy Director, Fiscal Affairs Department, Paulo Mauro, who made the call at a press briefing at the on-going 2018 IMF/World Bank Meetings in Bali, Indonesia, admitted that there is an issue of how to increase Nigeria’s revenue base, pointing out that the matter was not only crucial, but of utmost priority.

    Mauro, who was responding to an inquisition on what strategy was left for Nigeria to adopt to increase its revenue profile, said increasing the nation’s non-oil revenue was crucial, saying that way, more resources will be generated to fix infrastructure and as well attend to social spending.

    “Indeed, we do see this – increasing non‑oil revenues as a crucial priority for the country, If one looks at the ratio of interest payments-to-revenues for Nigeria, that is quite high. And certainly, increasing revenues is the way in which one creates the space to do social spending, infrastructure, and other types of spending that benefit economic growth. So clearly, that is a priority.”

    While stressing the need for increased revenue, Mauro also offered tips on how Nigeria could achieve the goal, saying the IMF has been in discussion with the country over some of the issues.

    He said: “We have been discussing over the years with the government, and we see the priorities in tax administration, but there are also aspects of tax policy that would help. So, certainly, in the tax administration, to increase the compliance rate, something that could be done is to increase tax audits and to use e‑filing to a greater extent. There are data matching exercises that can be conducted. He called for strategies to curtail tax evasion and reduction in corrupt tendencies. “So generally trying to reduce tax evasion and possibly corruption as well, those would be priorities on the tax administration side,” he pointed out.

    The IMF official said the Fund had earlier prompted the government to tinker with Excise taxes on tobacco and alcohol, a policy the government rolled out earlier, but which is currently under review.

    Mauro said what has been recommended in previous discussions was to increase excise taxes on tobacco and alcohol, adding that “Stamp duties is something that can be looked at again.”

    He said while efforts are on to increase revenue, attention should also be focused on how the proceeds are deployed. In his words: “I think it is not just the revenue side; it is also the spending side. Clearly, improving the choices that one makes on which infrastructure projects, how does one go about selecting the ones that are really going to boost growth. So, I think, definitely, it is a priority to increase revenues, but also to be careful about the ways in which we can make spending more efficient,” he stated.

    Read Also: FG releases N460bn capital expenditure – Udoma

    On debts, IMF’s Senior Communications Officer, in the Communication’s Department, Andreas Adrian, said there has been an increase in countries that issue debt in the international capital markets, including Sub-Saharan countries, a development he said was good for infrastructural financing, but nevertheless cautioned that it has its attendant consequences.

    He said: “It is good for development to be able to participate in international capital markets to fund things like infrastructure projects and to sustain investment in countries,” but added that “international borrowing has to be balanced with stability objectives, and so countries have to make sure that the level of borrowing is sustainable in the long run so that the country can pay back the debt and the interest rates on the debt even if times get worse at some point.”

    He said in the case of Nigeria, at the moment, the rise in oil prices is sustaining economic activity because Nigeria is an oil exporter,” pointing out that oil prices could decline at some point, “and so it is important to have some constraint on how much debt is issued.

    “As a matter of fact, when you look at debt issuance of Sub-Saharan African countries, we do see a sharp slowdown in issuance in recent months. As financial conditions for emerging markets have tightened, financial conditions also have tightened for Sub-Saharan African countries, and there is some slowdown in the debt, and so it might be that we see less issuance going forward.

    “Of course, there is going to be quite a bit of need for rollover of debt in 2020 through 2022 in particular. There is quite a bit of debt that is going to come due, so there will be rollover, and hopefully international capital markets will allow that rollover in a smooth fashion,” Adrian said.

  • Nigeria’s growth not enough to create jobs, says IMF

    The International Monetary Fund (IMF) has warned that Nigeria’s projected growth may not be enough to create jobs for the country’s growing population.

    The IMF, in its World Economic Outlook 2018, noted: “Nigeria’s projected economic growth in the sub-Sahara Africa from 3.1 per cent this year to 3.8 per cent in 2019 is not enough to create the needed jobs for the growing population of the region.”

    This projected growth, the Fund cautioned, may not be enough for the attainment of the Sustainable Development Goals, “if the trend remains for a while”.

    The three leading economies of the continent, Nigeria, South Africa and Angola were projected “to witness sluggish growth in 2019 and beyond. Nigeria will grow from 1.9 per cent in 2018 to 2.3 percent in 2019. South Africa and Angola are projected to move from 0.8 to 1.4 and -0.1 to 3.1 per cents.”

    IMF’s Chief Economist and Director of Research Maurice Obstfeld told journalists that “what affects the three major economies affect the whole continent as majority of the countries relies on their trajectories”.

    He admitted that the continent “will witness growth next year but the growing number of working class coupled with less jobs opportunities, huge public debts and poor infrastructure present a challenge in achieving the developmental goals of the United Nations”.

    Milesi Ferretti, Deputy Director Research, said while presenting the report that “the continent could do much better once these economies are on a more solid footing, particularly South Africa and Nigeria, because they are really large and affect a number of countries in their neighbourhood.”

    On the global ratings, IMF cut its global growth forecasts as a result of the trade tensions between the U.S. and trading partners. The Outlook said the global economy is expected to grow at 3.7 percent this year and next year — down 0.2 percentage points from an earlier forecast.

    “We are concerned about the downturn in economic growth,” noted Jubilee USA Executive Director Eric LeCompte. As a finance expert, LeCompte has tracked IMF meetings for nearly 10 years and is attending the meetings in Bali. “The report reminds us that inequality remains a serious problem and we still are not safe from financial crisis,” he warned.

    “We are seeing a growing debt crisis in many developing economies,” stated LeCompte who also serves on United Nations expert groups that focuses on economic issues. “At the same time, we see risky and speculative behaviour on the rise. We know that risky behaviour and unsustainable debt is a recipe for financial crisis.”

    The IMF issues the report ahead of the Annual IMF and World Bank meetings where world leaders, finance ministers and non-governmental organisations will gather this week in Bali, Indonesia.

    This year, the World Bank Group has committed nearly $67 billion in financing, investments, and guarantees most of which have gone to assist the poorest countries, its President and Chairman of the Board of Executive Directors Dr. Jim Yong Kim stated in his presentation of the 2018 World Bank Annual Report at the ongoing International Monetary Fund (IMF)/World Bank Meetings in Bali, Indonesia yesterday.

    He said the International Bank for Reconstruction and Development (IBRD) continued to see strong demand from clients for its services, with commitments rising to $23 billion in fiscal 2018. The International Development Association (IDA) has made its largest ever financial commitment of $24 billion to help the poorest countries.

    Jim Yong Kim described 2018 with the $24 billion financial support for the poorest countries as “the largest year of IDA commitments on record”.

    Other financial assistance rendered by the World Bank in 2018, he noted, includes: the International Finance Corporation (IFC) provision of more than $23 billion in financing for private sector development this past year, including $11.7 billion mobilised from investment partners. Of this, nearly $6.8 billion went to IDA countries, and more than $3.7 billion was invested in areas affected by fragility, conflict, and violence.

    Jim Yong Kim also revealed that the Multilateral Investment Guarantee Agency (MIGA) has become the third leading institution among the Multilateral Development Banks (MDBs) “in terms of mobilising direct private capital to low- and middle-income countries. This year, MIGA issued a record $5.3 billion in political risk insurance and credit enhancement guarantees, helping finance $17.9 billion worth of projects in developing countries. New issuances and gross outstanding exposure—at $21.2 billion this year—almost doubled as compared to fiscal 2013,” he said.

    Kim said the World Bank would unveil the Human Capital Index, which will rank countries according to how well they are investing in the human capital of the next generation.

    The ranking, he explained, “will put the issue squarely in front of heads of state and finance ministers so they can accelerate investments in their people and prepare for the economy of the future.”

    Around the world, demand he said “continues to rise for financing, expertise, and innovation. The needs are great—but the costs of failure are simply too high”.

    As a result, the shareholders of the World Bank, the President said, “are helping us meet that challenge with their approval of a historic $13 billion capital increase, which will strengthen the World Bank Group’s ability to reduce poverty, address the most critical challenges of our time, and help our client countries—and their people—reach their highest aspirations.”

    To accelerate inclusive, sustainable economic growth, the world he said, will “need a new vision for financing development—one that helps make the global market system work for everyone and the planet”.

    “In a world where achieving the Global Goals will cost trillions every year, but official development assistance is stagnant in the billions, we cannot end poverty without a fundamentally different approach,” he said.

    Secondly, to build resilience to shocks and threats—even as the world continues developing climate-smart infrastructure and improving response systems Jim Yong Kim canvassed for “innovative financial tools to help poor countries do what wealthy ones have long done: share the risks of crises with global capital markets”.

    Following the outbreak of Ebola in the Democratic Republic of Congo, the World Bank, according to him, facilitated “the Pandemic Emergency Financing Facility (PEF) with a rapid grant to support the Ebola response surge in the Democratic Republic of Congo. With this facility—and a similar one we are developing to improve responses to and prevent famine—we are finding new ways to help the poorest countries share risks with financial markets, helping break the cycle of panic and neglect that often occurs with crises.”

    The IMF called on Nigeria, South Africa and Angola to ensure solid economic footing to accelerate African economic growth.

    IMF Chief Economist Maurice Obstfeld made this call yesterday in Bali, Indonesia at the unveiling of the October 2018 World Economic Outlook, a publication of the IMF.

    He observed that their proper footing would check impediment of the growth of the African economy.

  • Buhari seeks World Bank, IMF, support on repatriation of stolen assets

    President Muhammadu Buhari has disclosed that he has enlisted the support of the World Bank, the International Monetary Fund (IMF), world security agencies and friendly nations to locate, recover and assist in repatriating stolen assets.

    He made the revelation on Wednesday in New York as he called on Africans in the Diaspora to come up with suggestions on how to curtail the menace of corruption on the continent.

    Buhari was addressing participants at the High Level Media Launch on “Illicit Financial Flows and the Fight against Corruption: Curbing the Existence of Safe Havens, the Role of Africans in the Fight against Corruption,” organised by the NEPAD/APRM Nigeria on the sideline of the 73rd Session of the United Nations General Assembly (UNGA).

    The President, in a statement by the Special Adviser on Media and publicity, Femi Adesina, also enjoined them to support measures against “Safe Havens” for illicit financial outflows from Africa.

    He told the audience that he had “enlisted the support of multi-lateral institutions like the World Bank, IMF, Security Agencies, and friendly nations to locate and recover and help repatriate stolen assets.”

    Describing corruption as a “cancer” which required global efforts to contain, President Buhari recalled that the negative impact of corruption on the continent informed the “resolve of African Heads of State and Government to remain committed to the fight against corruption,” and the declaration of 2018, as the African year of combating corruption with the overriding theme: Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation.

    Expressing appreciation to his fellow African leaders for the honour bestowed on him as the African Union Anti–Corruption Champion to lead the continental War Against Corruption in 2018 and beyond, the President noted that the change agenda of his administration “has overhauled, revitalized as well as institutionalized the machinery for an out and out fight against corruption and its agents, with a particular focus on illicit financial flows.”

    Read Also: FG will win war against corruption – Buhari

    While acknowledging that the social and economic costs of corruption and illicit financial flows are massive, and have continued to stunt the development of Africa, he cited a 2015 study by an African Union Panel led by Thabo Mbeki which estimated US$50 Billion illicit financial flows out of the continent every year.

    He said, “According to the report, about US$2.5billion of the US$50billion of Illicit Financial Flows was in respect of commercial activities. It is obvious that the continent still battles with grand corruption at the highest level, with Safe Havens, opaque systems in many recipient countries and the outright willingness of some advanced countries to harbour stolen funds from Africa.”

    Listing some of the negative impact of illicit financial flows out of the continent to include draining of foreign exchange reserves, reduction of tax/revenue collection, poor investment inflows and escalation of poverty, the President noted that these “nefarious practices are being perpetrated by some of the 60 international tax havens and secret jurisdictions with thousands of disguised corporations, shell companies, anonymous trust accounts, fake charitable foundations, money laundering and transfer pricing mechanisms.”

    He said that efforts were now being made by African leaders to checkmate these ills and ensure greater transparency and accountability in government business.

    He said, “One of the measures necessary if we are to make any headway is to bring in laws, regulations and policies that encourage transparent financial transactions, as well as implementing measures that would mitigate the incentives that facilitate illegal outflows from the continent.”

    He recalled that during the January 2018 AU Summit, he pledged to “organise African Youth Congresses against Corruption, in order to sensitise and engage our youth in the fight against corruption; mobilise African Union Member States to implement African Union Convention on Preventing and Combating Corruption; and advocate for the strengthening of the criminal justice system across Africa through exchange of information and sharing best practices in the enforcement of anti-corruption laws.”

    On the measures taken at the domestic level to curb corruption in Nigeria, President Buhari said, a mechanism had been put in place “for budget implementation and monitoring as well as assessing the impact on the lives of the citizens.”

    Other measures he said include: “The Federal Government had successfully commenced implementation of a whistle blowing programme and so far tens of millions of Dollars have been recovered; as part of the global initiative, Nigeria has joined the open Government Partnership (OGP) having been committed in 14 areas which are categorized into four thematic areas as follows; Promoting fiscal transparency; Access to information under FOI Acts; Anti-Corruption and Asset disclosure and Citizens’ Engagement and Empowerment.

    “The above measures have not only assisted in alleviating fears of foreign investors, but have also attracted billions of Dollars in Portfolio investments since April, 2017.”

    President Buhari also noted that the “enforcement of the Bank Verification Number (BVN) has helped in no small measure to identify and curb the deep-rooted corrupt practices by looters of government revenue with multiple accounts.

    “In the first quarter of 2016, I embarked on trips to the Middle East to sensitize their governments on the need to return stolen assets and hand over the looters for trial in Nigeria. In January 2017, Nigeria and UAE signed judicial agreements on extradition, transfer of sentenced persons, and mutual legal assistance on criminal matters.

    “In March 2016, the Federal Government and the Swiss Government signed a letter of intent on the restitution of illegally acquired assets forfeited in Switzerland,” adding that under the agreement, the “Swiss government would repatriate $321 million USD illicitly acquired.”

    President Buhari affirmed that “machinery has also been set in motion for monitoring, assessing and reporting on the UN 2030 Goals on Sustainable Development.”

  • IMF: rising risks constrain lending by banks

    The International Monetary Fund (IMF) has said the risk associated with lending is limiting the volume of loans being granted by banks.

    The view was among the preliminary findings by the IMF Staff at the end of their visit to Nigeria.

    The IMF staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, visited Nigeria from June 27 to July 9, this year to discuss recent economic and financial developments, update macroeconomic projections, and review reform implementation.

    At the end of the visit, Mati issued the following statement: “Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. International reserves remained stable at about $47 billion, supported by some convergence in existing foreign exchange windows, and despite some reversal of foreign inflows since April. Inflation declined to its lowest level in more than two years. Real GDP expanded by two per cent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.

    “A coherent set of policies to reduce vulnerabilities and increase growth remains urgent. This includes specific and sustainable measures to increase the currently low tax revenue—including through avoiding new tax exemptions — and ensuring budget targets are adhered to even in an election year. This process should be supported by keeping monetary policy tight through appropriate monetary policy tools that will help contain inflationary pressures and support a move towards a uniform market-determined exchange rate. Moving ahead with structural reforms is needed to invigorate inclusive growth, particularly in the power sector where faster progress would be needed to ensure financing shortfalls in the sector are met in a sustainable manner.

    He said that: “Corporate tax collection efforts improved but revenue shortfalls and the late adoption of the 2018 budget impede its implementation. Revenue from higher oil prices is limited by net losses from retail fuel sales while non-oil revenue remains below expectations, with yields from tax administration measures—including the Voluntary Asset Income Declaration Scheme (VAID) and increased tax audits—yet to fully materialize. Current spending remains in line with expectations. Carryover from 2017 to 2018 helped increase capital spending in the first four months of 2018, despite delayed approval of the 2018 budget. Lower yields have kept interest payments within the budgeted envelope, but the Federal Government’s interest-to-revenue ratio is expected to absorb more than half of revenues this year.

    Continuing, he said reforms to improve the business environment are progressing, including through identification of priority investment projects and the adoption of the Company and Allied Matters Act (CAMA)—a legislative landmark for private sector development. The implementation of the Power Sector Recovery Plan is advancing through a mini-grid policy, and regulations on eligible customers and meter asset providers.

    “Under current policies, the outlook remains challenging. Growth would pick up to about 2 percent in 2018, weighed down by lower than expected oil production and relatively weak agriculture growth. The fiscal deficit would narrow slightly, with higher oil revenues offsetting increased spending, including those planned in a supplementary budget. Inflation would pick up in the second half of 2018 as base effects dissipate and higher spending and supply constraints in agriculture put pressure on prices. Increased oil exports would keep the current account in surplus, helping stabilize gross international reserves even if the current pace of foreign portfolio outflows continues,” Mati said.

     

     

     

    “The team held productive discussions with senior government and central bank officials. It also met with representatives of the banking system, the private sector, civil society, and international development partners. The team wishes to thank the authorities and all those with whom they met for the productive discussions, excellent cooperation, and warm hospitality.”