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Tag: International Monetary Fund (IMF)

  • IMF cautions Nigeria against borrowing from China

    The International Monetary Fund (IMF) has warned Nigeria and other emerging market countries taking loans from China to consider the terms of such facilities, especially their compliance with the Paris Club arrangements.

    Speaking yesterday at the ongoing IMF/World Bank Spring Meetings in the United States, Director, IMF Monetary and Capital Markets Department, Tobias Andrian, said there was nothing bad in borrowing from China, except that the terms of such loans are always questionable.

    He said: “Loans from China are good, but the countries should consider the terms of the loans. And we urge countries that when they borrow from abroad, that the terms are favourable for the borrower, and should be conforming to the Paris Club arrangements.”

    Andrian, who spoke on the Global Financial Stability Report (GFSR), said: “Let me reiterate that in many frontier markets, we see that the share of debt that is not conforming to the Paris Club standards is on the rise. And that means that if there is any debt restructuring down the road one day, that can be very unfavourable to those countries. So, the borrowing terms, the covenants, are extremely important. And we do see a deterioration in that aspect.”

    Data from the Debt Management Office (DMO) showed that Nigeria’s total public debt rose to N24.39 trillion or $79.44 billion as at December 31, 2018 representing a year-on-year growth of 12.25 per cent. The 2018 debt stock is higher than that of 2017 by N2.662 billion.

    DMO said that as at June 2018, loans obtained by the Federal Government from China represented about 8.5 per cent of Nigeria’s external debt and that they were taken under concessionary terms. But Nigeria was last year seeking  $6 billion from China to fund the construction of the  Ibadan-Kano rail line project.

    Andrian said Nigeria had been borrowing from international markets, which gives the IMF some worries. He, however, noted that such loans are good as they allow the country to invest more, but expressed concerns over rollover or repayment risks.

    “At the moment, funding conditions in economies such as Nigeria and other Sub-Saharan African countries, are very favourable but that might change at some point. And there is risk of rollovers and whether the need for refinancing can be met in the future,” the IMF director said,  advising that Nigeria should seek higher capital for its banks through recapitalisation and also tackle rising non-performing loans in the sector.

    Adrian said that where there are financial stability concerns, authorities are expected to use prudential tools, such as higher capital in the banking system and more conservative underwriting standards to reduce financial stability risks.

    He said: “We advise countries that where those downside risks are increasing, to take more steps to ensure that vulnerabilities are not rising too much. Addressing non-performing loans is a first order importance for financial stability. Many countries have tackled that by developing secondary market for non-performing loans. And by being aggressive in writing off non-performing loans and through provisioning and use of improved accounting standards through International Financial Reporting Standards 9 (IFRS 9)”.

    According to Adrian, many countries do not have all the tools that are necessary to ensure that the system is financially stable, hence the financial stability concerns can feed into monetary policy decisions. He, therefore, urged monetary policy makers to also look at risks to financial stability both in the short term and in the medium term.

    As a way out of the crisis, the IMF director  advised policymakers to develop and deploy macro-prudential tools which can mitigate vulnerabilities and make the financial system more resilient.

    “Emerging markets facing volatile capital flows should limit their reliance on short-term overseas debt and ensure they have adequate foreign currency reserves and bank buffers. Besides,  monetary policy should be data dependent and well communicated,” he said.

    The Division Chief Monetary and Capital Markets at the IMF, Anna Ilyina, said the institutional mechanisms for resolution and recognition of non-performing loans are, of course, extremely important part of the process of cleaning up the banking system of bad loans and the authorities should continue working along those lines.

    She said: “ Credit quality has declined, underwriting standards weaker and debt levels are much higher. The concern is that there are very few macro-prudential tools for the corporate sector. In some countries, supervisors can limit the deterioration of underwriting standards to the extent that is provided by the banks, but one of the big trends post-crisis is that market-based finance has become more important for the corporates.”

    She advised that in maturing credit cycle, farsighted policy actions to reduce vulnerabilities can help avoid more painful adjustments in the future.

    On capital flow to Nigeria and other emerging markets, the IMF director said that overseas investment run by managers tracking popular indices had increased dramatically over the past decade.

    She said: “Widening the range of investors can be positive factor for emerging markets, yet that trend leaves economies vulnerable to a sudden reversal of capital flows in response to global trends. The vulnerabilities intensifying in a maturing credit cycle, this is the time for decisive policy action. The intensification of trade tensions and the threat of a disorderly practices have dented investor confidence. Policy makers should ensure that post crisis regulatory reform is fully implemented and resist calls for rolling back reforms,” she said.

    She also said that policymakers should act decisively to renew their commitment to open trade, discourage the buildup of debt and communicate clearly any shifts in monetary policy.

    Speaking on tax reforms at the Fiscal Monitor Session of the event, IMF Assistant Director, Fiscal Affairs Department, Cathy Pattillo, described tax reform in Nigeria as a very important issue.

    She said IMF’s main recommendations for Nigeria is the need for a comprehensive tax reform that would sustain the increase in non-oil revenue.

    “And the reason why that is needed is that Nigeria has one of the lowest ratios of non-oil revenue to Gross Domestic Product (GDP) at around 3.4 per cent  in the world. And the total tax revenue to GDP at around eight per cent is also very low compared to peers.”

    She said that the interest to tax ratio is low, adding that the funds realised should be spent on important developmental projects, such as infrastructure and human capital.

    She also advised Nigeria to increase excise taxes and begin aggressive streamlining of tax incentives and exemptions

  • IMF cautions Nigeria against borrowing from China

    The International Monetary Fund (IMF) has warned Nigeria and other emerging market countries taking excessive loans from China to consider the terms of such facilities, especially, their compliance with the Paris Club arrangements.

    Speaking on Wednesday at the ongoing IMF/World Bank Spring Meetings in United States of America, Director, IMF Monetary and Capital Markets Department, Tobias Andrian, said that there was nothing bad in borrowing from China, except that the terms of such loans are always questionable.

    He said: “Loans from China are good, but the countries should consider the terms of the loans. And we urge countries that when they borrow from abroad, the terms are favorable for the borrower, and should be conforming to the Paris Club arrangements”.

    Continuing, Andrian, who spoke on the Global Financial Stability Report (GFSR) said: “Let me reiterate that in many frontier markets, we see that the share of debt that is not conforming to the Paris Club standards is on the rise. And that means that if there is any debt restructuring down the road one day, that can be very unfavorable to those countries. So, the borrowing terms, the covenants, are extremely important. And we do see a deterioration in that aspect.”

    Data from Debt Management Office (DMO) showed that Nigeria’s total public debt rose to N24.39 trillion or $79.44 billion as at December 31, 2018 representing a year-on-year growth of 12.25 per cent. The 2018 debt stock is higher than the one recorded in 2017 by N2.662 billion.

    DMO said that as at June 2018, loans obtained by the Federal Government from China represented about 8.5 per cent of Nigeria’s external debt and that there taken under concessionary terms. But Nigeria was last year seeking $6 billion from China to fund the construction of the Ibadan-Kano rail line project.

    Andrian said Nigeria has been borrowing from international markets, which gives the IMF some worries, saying however that such loans are good as it allows the country to invest more, but expressed concerns over rollover or repayment risks going forward.

    “At the moment, funding conditions in economies such as Nigeria and other Sub-Saharan African countries are very favourable but that might change at some point. And there is risk of rollovers and whether these need for refinancing can be met in the future,” the IMF director said, advising that Nigeria should seek higher capital for its banks through recapitalization and also tackle rising non-performing loans in the sector.

    Adrian said that where there are financial stability concerns, authorities are expected to use prudential tools such as higher capital in the banking system and more conservative underwriting standards to reduce financial stability risks.

    He said: “We advise countries that where those downside risks are increasing, to take more steps to ensure that vulnerabilities are not rising too much. Addressing non-performing loans is a first order importance for financial stability. Many countries have tackled that by developing secondary market for non-performing loans. And by being aggressive in writing off non-performing loans and through provisioning and use of improved accounting standards through international Financial Reporting Standards 9 (IFRS 9)”.

    He said many countries do not have all the tools that are necessary to make sure that the system is financially stable, hence the financial stability concerns can feed into monetary policy decisions. He therefore urged monetary policy makers to also look at risks to financial stability both in the short term and in the medium term.

    Read Also: IMF: economy on right track

    As a way out of the crisis, the IMF director advised policymakers to develop and deploy macro-prudential tools which can mitigate vulnerabilities and make the financial system more resilient.

    “Emerging markets facing volatile capital flows should limit their reliance on short-term overseas debt and ensure they have adequate foreign currency reserves and bank buffers. Besides, monetary policy should be data dependent and well communicated,” he said.

    Also speaking, the Division Chief Monetary and Capital Markets at the IMF, Anna Ilyina, said the institutional mechanisms for resolution and recognition of non-performing loans, are of course, extremely important part of the process of cleaning up the banking system of bad loans and the authorities should continue working along those lines.

    She said: “Credit quality has declined, underwriting standards weaker and debt levels are much higher. The concern is that there are very few macro-prudential tools for the corporate sector. In some countries, supervisors can limit the deterioration of underwriting standards to the extent that is provided by the banks but, one of the big trends post-crisis is that market-based finance has become more important for the corporates”.

    She advised that in maturing credit cycle, farsighted policy actions to reduce vulnerabilities can help avoid more painful adjustments in the future.

    On capital flow to Nigeria and other emerging markets, the IMF director said that overseas investment run by managers tracking popular indices have increased dramatically over the past decade.

    She said: “Widening the range of investors can be positive factor for emerging markets, yet that trend leaves economies vulnerable to a sudden reversal of capital flows in response to global trends. The vulnerabilities intensifying in a maturing credit cycle, this is the time for decisive policy action. The intensification of trade tensions and the threat of disorderly practices have dented investor confidence. Policy makers should ensure that post crisis regulatory reform is fully implemented and resist calls for rolling back reforms,” she said.

    She also said that policymakers should act decisively to renew their commitment to open trade, discourage the buildup of debt and communicate clearly, any shifts in monetary policy.

    Speaking on tax reforms at the Fiscal Monitor Session of the event, IMF Assistant Director, Fiscal Affairs Department, Cathy Pattillo, said tax reform in Nigeria is very important issue.

    She said IMF’s main recommendation for Nigeria is the need for a comprehensive tax reform that would sustainably increase non-oil revenue.  “And the reason why that is needed is that Nigeria has one of the lowest ratios of non-oil revenue to Gross Domestic Product (GDP) at around 3.4 per cent in the world. And the total tax revenue to GDP at around eight per cent is also very low compared to peers.

    She said that the interest to tax ratio is low, adding that the funds realized should be spent on important developmental projects like infrastructure and human capital.

    She also advised Nigeria increase excise taxes, and begin aggressive streamlining of tax incentives and exemptions.

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

    The International Monetary Fund (IMF) World Economic Outlook released on Tuesday shows that growth prospects for commodity exporters in Nigeria and Angola are hampered and are expected to reach about 2.6 percent and 3.9 percent in the medium term. Excerpts:

    Global growth in 2019 is also weighed down by the emerging market and developing economy group, where growth is expected to tick down to 4.4 percent in 2019 (from 4.5 percent in 2018), 0.3 percentage point lower than in the October 2018 WEO. The decline in growth relative to 2018 reflects lower growth in China and the recession in Turkey, with an important carryover from weaker activity in late 2018, as well as a deepening contraction in Iran.

    Conditions are projected to improve during 2019 as stimulus measures sustain activity in China and recession strains gradually ease in economies such as Argentina and Turkey. In 2020, growth is projected to rise to 4.8 percent, driven almost entirely by an expected strengthening of activity in these economies on the back of policy adjustment and some easing of strains in countries affected by conflict and geopolitical tensions. For the latter group of countries in particular, the forecast is subject to very significant uncertainty. With declining growth in advanced economies, the projected pickup in global growth in 2020 is entirely predicated on this projected improvement for the emerging market and developing economy group.

    Near-term prospects for emerging market and developing economies continue to be shaped by the interaction between country-specific fundamentals and a challenging external environment marked by the slowdown in advanced economies; trade tensions; expected gradual tightening of financial conditions consistent with some further removal of monetary policy accommodation in the United States; and, for commodity exporters, a generally subdued outlook for commodity prices (including oil prices, which are projected to remain below their 2018 average throughout the forecast horizon).

    Growth in emerging and developing Asia is expected to dip to 6.3 percent in 2019 and 2020 (from 6.4 percent in 2018), with a marginal downward revision for 2020 relative to the October WEO. Economic growth in China, despite fiscal stimulus and no further increase in tariffs from the United States relative to those in force as of September 2018, is projected to slow on an annualized basis in 2019 and 2020. This reflects weaker underlying growth in 2018, especially in the second half, and the impact of lingering trade tensions with the United States. The projection for 2019 is slightly stronger than in the October 2018 WEO, reflecting the revised assumption on United States tariffs on Chinese exports, as described in Box 1.2, while the projection for 2020 is slightly weaker, as the underlying momentum in activity is more subdued. In India, growth is projected to pick up to 7.3 percent in 2019 and 7.5 percent in 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy. Nevertheless, reflecting the recent revision to the national account statistics that indicated somewhat softer underlying momentum, growth forecasts have been revised downward compared with the October 2018 WEO by 0.1 percentage point for 2019 and 0.2 percentage point for 2020, respectively.

    Activity in emerging and developing Europe in 2019 is expected to weaken more than previously anticipated, despite generally buoyant and higher-than-expected growth in several central and eastern European countries, before recovering in 2020. The sizable revision for the region is mostly due to a substantial projected contraction in Turkey in 2019, where the weakness in demand—following tighter external financing conditions and needed policy tightening—is expected to continue in early 2019 before a recovery takes hold in the second half of the year.

    In Latin America, growth is projected to recover over the next two years, to 1.4 percent in 2019 and 2.4 percent in 2020. In Brazil, growth is projected to strengthen from 1.1 percent in 2018 to 2.1 percent in 2019 and 2.5 percent in 2020. In Mexico, growth is now forecast to remain below 2 percent in 2019–20, a markdown close to 1 percentage point for both years relative to October. These changes, in part, reflect shifts in perceptions about policy direction under new administrations in both countries. Argentina’s economy is projected to contract in the first half of 2019 as domestic demand slows with tighter policies to reduce imbalances, returning to growth in the second half of the year as real disposable income recovers and agricultural production rebounds after last year’s drought. Venezuela’s economy is expected to contract by one-fourth in 2019, and a further 10 percent in 2020—a greater collapse than projected in the October 2018 WEO and one that generates a sizable drag on projected growth for the region and for the emerging market and developing economy group in both years.

    Read Also: IMF: economy on right track

    Growth in the Middle East, North Africa, Afghanistan, and Pakistan region is expected to decline to 1.5 percent in 2019, before recovering to about 3.2 percent in 2020. The outlook for the region is weighed down by multiple factors, including slower oil GDP growth in Saudi Arabia; ongoing macroeconomic adjustment challenges in Pakistan; US sanctions in Iran; and civil tensions and conflict across several other economies, including Iraq, Syria, and Yemen, where recovery from the collapse associated with the war is now expected to be slower than previously anticipated.

    In sub-Saharan Africa, growth is expected to pick up to 3.5 percent in 2019 and 3.7 percent in 2020 (from 3.0 percent in 2018). The projection is 0.3 percentage point and 0.2 percentage point lower for 2019 and 2020, respectively, than in the October 2018 WEO, reflecting downward revisions for Angola and Nigeria with the softening of oil prices. Growth in South Africa is expected to marginally improve from 0.8 percent in 2018 to 1.2 percent in 2019 and 1.5 percent in 2020, a 0.2 percentage point downward revision for both years relative to the October projections. The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections.

    Activity in the Commonwealth of Independent States is projected to expand about 2¼ percent in 2019–20, slightly lower than projected in the October 2018 WEO, as weaker oil prices weigh on Russia’s growth prospects.

    Modest Outlook for Medium-Term Growth Beyond 2020, global growth is set to plateau at 3.6 percent over the medium term. For the advanced economy group, growth is projected to moderate further over the medium term as the underlying structural headwinds to potential output (namely, continued weak productivity growth and slowing labor force growth) increasingly assert influence on the path of output as the cyclical forces discussed above fade away. Growth for the emerging market and developing economy group is expected to broadly stabilize at its 2020 level for the outer years of the forecast horizon, but with important offsetting regional differences.

    Specifically, for advanced economies, growth is projected to slow to 1.6 percent by 2022 and remain at that level thereafter. The productivity slowdown that set in before the 2008–09 global financial crisis (Adler and others 2017) is projected to abate somewhat, with a slight pickup in productivity expected over the medium term. Despite the apparent proliferation of digitalisation and automation, their cumulative impact on productivity is expected to be modest over the forecast horizon—likely benefiting consumer welfare to a larger extent than labor productivity (Box 1.5 of the April 2018 WEO). Other developments potentially have less favorable implications for productivity. These include the retreat from global economic integration (projections for global trade volume growth have been marked down following the tariff increases of 2018).

    The modest uptick expected in productivity is likely only partially to counteract the drag on potential output growth anticipated from slower labor force growth as the population ages. This is particularly relevant for Japan and southern Europe (see Chapter 2 of the April 2018 WEO for a discussion of the changes in labor force participation rates across advanced economies).

    For emerging market and developing economies, growth is projected to stabilize at about 4.8 percent over the medium term. The combination of higher growth than in advanced economies and the group’s rising weight in global GDP translates into a significant increase in emerging market and developing economies’ share of global growth, from 76 percent in 2019 to about 85 percent in 2024.

    The medium-term growth forecast incorporates continued strong investment growth in emerging market and developing economies, accounting for more than one-third of their GDP growth rate during the projection horizon (Figure 1.14). In turn, this robust investment path is predicated on a smooth trajectory for the drivers of capital spending; a gradual tightening in financial conditions (which is particularly relevant to the investment outlook in the emerging market and developing economy group, given the rapid build up of leverage during years of low interest rates); quick resolution of trade disagreements and subsequent easing of trade tensions; and broader policy actions that help reduce uncertainty. Chapter 3 discusses how the retreat from trade integration threatens the long-standing downward trend in the relative price of capital goods and how this could weigh on the investment prospects of developing economies.

    The medium-term growth forecast for emerging market and developing economies reflects important differences across regions. In emerging Asia, growth is expected to remain above 6 percent through the forecast horizon. Central to this smooth growth profile is a gradual slowdown in China to 5.5 percent by 2024 as internal rebalancing toward a private-consumption and services-based economy continues and regulatory tightening slows the accumulation of debt and associated vulnerabilities. Growth in India is expected to stabilize at just under 7¾ percent over the medium term, based on continued implementation of structural reforms and easing of infrastructure bottlenecks.

    In Latin America, growth is projected to increase from 2.4 percent in 2020 to 2.8 percent over the medium term. Financial stabilisation and recovery in Argentina, where growth is projected to strengthen to about 3½ percent over the medium term, contributes to that region’s growth improvement. So is stable, though moderate, growth in Brazil and Mexico (in the range of 2¼–2¾ percent) as structural rigidities, subdued terms of trade, and fiscal imbalances (particularly for Brazil) weigh on the outlook.

    Activity in emerging Europe is projected to pick up from the current post-global-financial-crisis low, with the region expected to grow just above 3 percent over the medium term. This improvement reflects primarily the forecast for Turkey, where activity is projected to gradually strengthen after the economy returns to positive annual growth in 2020. Over the medium term,

    Turkey’s growth is projected to pick up to 3.5 percent as domestic demand recovers from the current sharp contraction that is reducing macroeconomic and financial imbalances. For other economies in the region with robust growth rates in recent years, such as Poland and Romania, growth is expected to moderate to about 3 percent over the medium term, reflecting the fading of stimulus from EU investment funds and accommodative policies.

    The outlook for the Commonwealth of Independent States is for growth to stabilize at 2.4 percent over the medium term. This largely reflects sluggish growth in Russia of about 1½ percent over the medium term, weighed down by the modest outlook for oil prices and structural headwinds.

    Prospects vary across sub-Saharan Africa, reflecting the heterogeneity of the economies, associated with disparities in the level of development, exposure to weather shocks, and commodity dependence. For the region as a whole, growth is projected to increase from 3.7 percent in 2020 to about 4 percent in 2024 (although for close to two-fifths of economies, the average growth rate over the medium term is projected to exceed 5 percent).

    Growth prospects for commodity exporters are weighed down by the soft outlook for commodity prices, including for Nigeria and Angola, where growth is expected to reach about 2.6 percent and 3.9 percent, respectively, in the medium term. In South Africa, growth is projected to stabilise at 1¾ percent over the medium term as structural bottlenecks continue to weigh on investment and productivity, and metal export prices are expected to remain subdued. Rising debt-service costs as financial conditions tighten globally and difficult adjustment processes to diversify production structures away from resource extraction are expected to weigh on growth in many economies across the region.

    The medium-term outlook for the Middle East, North Africa, Afghanistan, and Pakistan region is largely shaped by the outlook for fuel prices, needed adjustment to correct macroeconomic imbalances in certain economies, and geopolitical tensions. Growth in Saudi Arabia is expected to stabilize at about 2¼–2½ percent over the medium term, as stronger non-oil growth is countered by the subdued outlook for oil prices and output. In Pakistan, in the absence of further adjustment policies, growth is projected to remain subdued at about 2.5 percent, with continued external and fiscal imbalances weighing on confidence.

    Elsewhere in the region, activity is weighed down by the expected impact of sanctions in Iran, civil strife in Syria and Yemen, and rising debt-service costs and tighter financial conditions in Lebanon.

    Convergence prospects are bleak for some emerging market and developing economies. Across sub-Saharan Africa and the Middle East, North Africa, Afghanistan, and Pakistan region, 41 economies, accounting for close to 10 percent of global GDP in purchasing-power-parity terms and close to 1 billion in population, are projected to grow by less than advanced economies in per capita terms over the next five years, implying that their income levels are set to fall further behind those economies.

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

    …Experts fret over impending of global financial crisis

     

    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 that “Nigeria’s projected economic growth in the sub-Sahara Africa from 3.1 percent this year to 3.8 percent in 2019 is not enough to create the needed jobs for the growing population of the region.”

    This projected growth the fund further 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. While 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 respectively.”

    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 the a more solid footings, 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, as the trade war started to hit economic activity worldwide.

    “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 Nation expert groups that focuses on economic issues. “At the same time, we see risky and speculative behavior on the rise. We know that risky behavior 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 nongovernmental organizations will gather this week in Bali, Indonesia.

  • IMF to release World Economic Outlook

    The International Monetary Fund (IMF) will this week release the much awaited World Economic Outlook which project to the trajectory the world economies will take in the 12 months.

    The World Economic Outlook report will be released on Monday while the Global Financial Stability Report and the Fiscal Monitor  will be released on Wednesday.

    Already world economic leaders have started gathering in Bali Indonesia to deliberate on these reports and hold bilateral meetings on the sidelines of the meetings to prepare themselves for the fall out of the Outlook.

    Nigeria’s finance minister Zainab Ahmed and Governor of the Central Bank of Nigeria Mr. Godwin Emefiele will lead the Nigerian delegation to the meetings.

    Some of the crucial meetings that Nigeria participate in include the African Region Vice President Meeting;  Angola, Nigeria and South Africa (ANSA) Constituency Ministerial Meeting; AfreximBank Meeting; meetings with rating agencies, Fitch, Moody’s and Standard and Poors; the G24/ African Finance Institution Roundtable Meeting; Commonwealth Finance Ministers Meeting; Investors Forum; G-24 Finance Minister and Central Bank Governors Meeting (Ethiopia, Kenya, Nigeria and South Africa among others.

    34,000 participants will be Bali for two weeks to chart an way forward to the world economy. Addressing journalists on the events of the coming days, Minister of Communications and Information Technology of the Republic of Indonesia, Rudi Antara said Indonesia has “spent enough time preparing Bali to host the annual meetings, but this is considered a big one because there will be 34,000 participants  gathered in Nusa Dua, Bali to participate in the annual meetings.

    Read Also: 2019: Massive defection looms in Abia PDP

    “By hosting the meeting, central bank Governors and Minister of Finance from across the world are putting their eyes on Indonesia, particularly Bali, and there will be the Bali declarations. We hope to come up with a breakthrough to respond to the global uncertainties in the world economies” Antara hinted as the possible gains of hosting the meeting.

    To achieve this he said “There will be discussions by the 189 ministers of finance and another 189 central bank governors to discuss the Bali declarations. We will come up with new human capital index for the globe.

  • Mauritius needs to clarify monetary policy- IMF

    Mauritius needs to clarify monetary policy- IMF

    The International Monetary Fund (IMF) on Saturday says Mauritius needs to clarify its monetary policy to increase coherence.

    The IMF said in a statement that the primary objective of the central bank was to maintain price stability and promote “orderly and balanced” economic development.

    “There appears to be no consensus on the definition of price stability and on the role of the nominal exchange rate in the conduct of monetary policy,” the fund said.

    It said the perceived multiplicity of objectives can risk overburdening monetary policy, spur policy inconsistencies, and potentially undermine the central bank’s ability to anchor inflation expectations.

    “Announcing a medium-term inflation objective will prove instrumental in the implementation of a new policy framework.

    “An inflation objective of about three per cent could serve as the foundation for the BOM’s (Bank of Mauritius‘s) policy actions and communication,” the IMF said.

    The Indian Ocean island nation is trying to diversify its economy away from sugar, textiles and tourism into offshore banking, business outsourcing, luxury real estate and medical tourism.

  • Ghana budgets $13.9bn in 2018

    Ghana budgets $13.9bn in 2018

    The Ghanaian government plans to spend 13.9 billion dollars (62 billion Ghana cedis) in the 2018 fiscal year, the country’s finance minister said on Wednesday.

    Presenting the government’s fiscal policy to parliament, Kenneth Ofori-Atta, said the budget, with the theme “Putting Ghana Back to Work”, would continue and expand programmes that began in 2017 and initiate new strategic programmes in 2018.

    This expenditure, the minister said, would be financed from revenue and grants expected to reach 51 billion cedis in the 2018 fiscal year.

    Domestic revenue for 2018 is estimated at 50.5 billion cedis, representing an annual growth of 26.9 per cent, while non-tax revenue is estimated at 8 billion cedis, equivalent to 3.3 per cent of GDP.

    From development partners, the government expects to receive 586.8 million cedis.

    The West African cocoa, gold and oil exporter experienced lower revenue performance in the first half of 2017.

    During the period, domestic revenue fell short of the target by 13.8 per cent, driven mainly by a sharp drop in tax revenue.

    Tax revenue fell short of target and accounted for 75.8 per cent of the drop in total revenue, caused mainly by shortfalls in income taxes and import duties.

    One of the programmes to maximise tax revenue, according to the minister, will be the employment of tertiary graduates in a “Revenue Ghana” programme aimed at employing 100,000 tertiary graduates into various sectors.

    The 2018 budget is expected to result in an overall budget deficit of 10.9 billion cedis or 4.5 per cent of GDP to be financed from both domestic and foreign sources.

    Razia Khan, Chief Economist and Managing Director for Africa and Global Research at Standard Chartered Bank, said it “is a consolidation budget largely as had been expected, given the International Monetary Fund ( IMF )’s likely input into the process”.

    She added that Ghana was favoured by the rise in hydrocarbons production “which provides a boost to nominal growth, although our expectation is for a pick-up in non-oil GDP as well.”

    “The 23 per cent projected rise in total revenue and grants in 2018 will nonetheless still be scrutinised closely, as will the ability of the authorities to keep spending and arrears clearance within the limits outlined.

    “The plan is for a reduction in the budget deficit (on an overall basis) to 4.5 per cent of GDP, from a projected 6.3 per cent of GDP this year,” she stated.

    Given the revenue disappointment to date, Khan pointed out that there might be a case for Ghana to control spending much more stringently in order to achieve a primary surplus in 2018 of the 1.6 per cent magnitude suggested.

    While Ghana has made significant improvements in debt management, the economist maintained that it was still going to require years of primary surpluses to reduce debt ratios meaningfully.

    Khan added that the key test would be the political will to do what was needed, even when the IMF programme came to an end.

    NAN

  • Pakistan finance minister denies corruption charges

    Pakistan finance minister denies corruption charges

    Pakistani Finance Minister, Ishaq Dar, pleaded not guilty on Wednesday to owning assets beyond his means, an official from the ruling Pakistan Muslim League-Nawaz said, amid a corruption investigation into former Prime Minister, Nawaz Sharif.

    The Supreme Court in July disqualified Sharif for not declaring a small source of income and ordered an investigation into Sharif, his children and Dar, Sharif’s former accountant.

    Dar’s son is also married to one of Sharif’s daughters.

    “Dar told the court that he was innocent and he will prove that his assets are legitimate,” Jan Achakzai, a PML-N official, said.

    Dar did not speak to the media after his appearance in court in Islamabad but has dismissed all the allegations against him.

    Sharif has also denied any wrongdoing and has been critical of the judiciary, calling the corruption proceedings against him a conspiracy.

    Several senior PML-N figures, including Sharif’s daughter Maryam, have hinted that Pakistan’s powerful military were behind Sharif’s ouster. The army denies playing any role.

    Dar was credited with steering Pakistan’s economy to a sounder footing following a 2013 balance of payments crisis but over the past year those economic gains have begun to erode, according to the International Monetary Fund (IMF) and analysts.

    Growth in the 300 billion dollars economy hit 5.3 per cent last fiscal year (July-June), the fastest pace in a decade, but foreign currency reserves have dwindled.

    The 2016/17 current account deficit has more than doubled to 12.1 billion dollars.

    Dar’s reluctance to let the rupee weaken to ease current account pressures has courted criticism from economists, who say the PML-N is making economic decisions with one eye on the next general election, likely to be held in mid-2018.

    Some analysts have warned Pakistan may need to go back to the IMF for another bailout package if current trends continue.

    Under new Prime Minister, Shahid Abbasi, Dar has been removed from the post of chairing the cabinet’s powerful Economic Coordination Committee.

  • Ghana inflation rises to 13.0% in April in higher transport costs

    Ghana inflation rises to 13.0% in April in higher transport costs

    Higher transport costs helped drive Ghana’s annual inflation rate higher to 13.0 per cent in April from 12.8 per cent the previous month, the statistics office said on Wednesday.

    The government of President Nana Akufo-Addo wants to slow inflation to 11.2 per cent by the end of the year as part of its drive to restore macroeconomic stability under a three-year aid deal with the International Monetary Fund (IMF).

    In a positive for that target, food inflation fell to 6.7 per cent in April from 7.3 per cent a month earlier.

    Non-food inflation, however, accelerated to 16.3 per cent from 15.6.

    “The marginal increase in the index was mainly due to a rise in transport fares which went up by 9.6 per cent last month,” deputy government statistician Baah Wadieh told a news conference.

    Ghana, which exports cocoa, gold and oil, said in April it was committed to reducing inflation, public debt and the budget deficit.

    It was one of Africa’s best-performing economies until 2014, when it was hit by a slump in commodity prices.

  • Painful debt service: Fed Govt refinances debts 

    Painful debt service: Fed Govt refinances debts 

    Actions reminiscent of the Nigeria’s debt forgiveness era is playing out as the federal government has decided to refinance the nation’s debts.

    Addressing journalists at the end of the launch of the regional economic outlook for sub-Saharan Africa in Abuja Tuesday, the minister of finance Mrs Kemi Adeosun disclosed that “government is refinancing debts with short term maturity to match tenure of projects. Our problem is debt servicing which is too high. The amount of interest is significant.”

    The reason for refinancing the nation’s debts she said is because the government was servicing the nation’s debts faster than it is using the money to deliver on the projects the monies were meant for.

    According to Adeosun, “our revenue is too low that is the problem. We are working hard to address this. The solution is not that we are borrowing too much but that our revenue mobilization has to be improved.”

    On his part, the Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele described the impact of the apex bank’s forex intervention as positive “because more businesses are now able to access forex which will lead to more productivity.”

    The CBN governor also noted that the Economic Recovery and Growth Plan (ERGP) of the government “has bold plans both Monetary and Fiscal authorities are committed to to ensuring its success.”

    Another issue which got significant attention during the launch of the economic outlook was the issue of Non-Performing Loans (NPL). Speaking on this issue, Emefiele said the CBN was “working very hard to address NPL to get back to levels set by regulatory authorities.”

    The International Monetary Fund (IMF) coordinated report on Sub-Saharan Africa economic outlook projected a modest growth for the continent at 2.6% in 2017.

    Three countries -Nigeria, Angola and South Africa – the continent’s largest economies were tipped as countries that will contribute about three quarters of the region’s expected growth.

    The forecast, including other draw backs that held down the sub-sahara region from growing at fastest economic pace,  were contained in the   IMF regional report on Africa  unveiled  yesterday in Abuja,   first time    the report was launched in   any Africa nation.

    The  IMF Director (African Department) Mr Abebe Aemro Selassie, projected Nigeria’s  growth at 0.8% post-recession. “The 0.8% forecast growth, he said is conditional and premised on “a higher oil production subject to, if peace in the Niger Delta can be maintained- and strong agricultural production”.

    The report observed that growth in sub-Saharan Africa remains fragile as growth was slowed considerably in 2016.

    “In 2016, growth slowed in about two-thirds of the countries in the region, accounting for 83% of regional GDP- and is estimated to have reached just 2% . This marked the region’s worst  performance in more than two decades. Even the modest rebound to 2% expected in 2017 will be to a large extent driven by one- off factors in the three  largest  countries- a recovery in oil production in Nigeria, higher public spending ahead of election in Angola, and the fading of drought effects in South Africa”.

    To correct the economic imbalance bedeviling the sub region, the report called for “urgent policy action to address macroeconomic imbalance in resource intensive countries, and to preserve existing momentum elsewhere.”

    Responding, Mrs. Kemi Adeosun said “we have tried to mitigate these pressure through series of interventions , such as growing the non- oil sector base through increased efficiency of tax and customs collections, reduced cost of doing business , support for agriculture, infrastructure and manufacturing as well as reflating the economy through special fiscal support to sub nationals among several measures”.