IMF Forecasts 0.8% Economic Growth For Nigeria
The International Monetary Fund (IMF), Wednesday, said Nigeria is expected to emerge from recession this year with an economic growth of 0.8 percent, but warned that threats to recovery remained elevated, and that the economy will not grow enough to reduce unemployment and poverty.
The IMF, therefore, advised the Federal Government to pursue a policy of fiscal consolidation through higher non-oil revenues, to ensure stability in growth.
Nigeria slipped into a recession last year as low crude oil prices and production slashed government revenues, caused dollar shortages and crippled the nation’s economy.
“Economic growth in Nigeria is expected to recover slightly to 0.8 percent this year after the country slipped into its first recession in more than two decades last year,” IMF said in the report.
The Fund said the government saw significant revenue shortfalls in the first half of the year, with interest payments remaining as high as 40 percent at end of June.
It projected interest payments would rise further under current economic policies.
“In the near term, a stronger push for front-loaded fiscal consolidation through a sustainable increase in non-oil revenues would be needed to create space for infrastructure spending, social protection, and private sector credit.
This should be simultaneously accompanied by a monetary policy that avoids direct financing of the government and is kept sufficiently tight, a unified and market-based exchange rate, and rapid implementation of structural reforms,” IMF stated.
In addition to a fiscal consolidation one other major recommendations of the organisation after its staff team met federal government officials to review the implementation of the present administration’s reform programmes was that the Central Bank of Nigeria should avoid direct funding of government.
The IMF staff team led by Amine Mati visited Nigeria from July 20-31, 2017 to discuss recent economic and financial developments, as well as update macroeconomic projections.
The Fund in a statement, Wednesday, also advised government to urgently act on coherent policies capable of ensuring the speedy recovery of the economy.
It said, “Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent. This includes implementing immediately specific priorities that will help achieve the goals of the ERGP.
“In the near term, a stronger push for front-loaded fiscal consolidation through a sustainable increase in non-oil revenues would be needed to create space for infrastructure spending, social protection, and private sector credit.
This should be simultaneously accompanied by a monetary policy that avoids direct financing of the government and is kept sufficiently tight, a unified and market-based exchange rate, and rapid implementation of structural reforms. Pursuing these policies would help reduce macroeconomic vulnerabilities and create an environment for a diversified private-sector led economy.”