ABUJA–Following the dwindling oil prices that have apparently
affected the national income of most countries, the International
Monetary Funds, IMF, has warned President Mohammed Buhari not to
strangulate poor Nigerians with rigid economic policies.
President Muhammadu Buhari receiving IMF Managing Director, Christine Lagarde in Abuja.
The Body also stated that it was concerned by the condition of
teeming population of poor Nigerians who would be affected by the
rigidity of the policies, stressing the need to inject fiscal discipline
in the policy formulations.
The remarks emanated from the Managing Director of the International
Monetary Fund (IMF), Christine Lagarde, who visited president Buhari at
the presidential villa in Abuja on Tuesday.
Briefing the State House Correspondents after the meeting, the
visiting IMF scribe also said that her mission to Nigeria was not
connected to the negotiations of any loan with any kind of
conditionalities but to have discussion on the economic reforms and
objectives of the present government.
Also recalling the tremendous progress Nigeria has made in its
democratic process, Lagarde said a lot had changed in the country since
she last visited four years ago.
She also revealed that a team of Economists from IMF would be
engaging the financial authorities in Nigeria to review the economic
polices.
She said: “I was in Nigeria four years ago and in four years, many
things have changed. That has been the topic of our discussions with
President Buhari and his team. Looking back four years ago, massive
democratic change has occurred in this country peacefully. Nigeria has
become the largest economy in Africa, certainly the most populated and
with a very attractive market.
“But things have changed in a more complicated way in the sense that
the the source of revenue to the government of Nigeria which was
predominantly oil has seen its price divided by more than half and
the financing cost around are beginning to rise if only because the
economic situation in the United States has improved and interest rates
will begin to rise. Added to which emerging countries economies are
decelerating their growth….
“First let me make it clear that I’m not here nor is my team in this
country to negotiate a loan with conditionalities. We are not into
programme negotiations and frankly at this point in time, given
the determination, resilience displayed by the President and his team, I
don’t see why an IMF programme will be needed. So, of course,
discipline is going to be needed, of course, implementation is going to
be key for the objectives and the ambitions to serve the country well,
in order for it to be actually sustainable.
“We believe that with very clear primary ambition to support the poor
people of Nigeria, there could be added flexibility in the monetary
policy, particularly if as we think, the price of oil is likely to be
possibly low for longer, because clearly the authorities should not
deplete the reserves of the country, simply because of rules that will
be exceedingly rigid. I’m not suggesting that but that rigidity be
totally removed but some degree of flexibility will be enough.
“We have excellent discussions with Buhari and we discussed the
challenges ahead stemming from oil price reduction. The necessity to
apply fiscal discipline and the need to also respond to the
population needs while addressing the Medium Term specificities of
improving the competitiveness of Nigeria and yet also focusing on the
short term fiscal situation which requires that revenue sources be
identified in order to compensate the shortfall resulting from oil price
decline.
“Oil is not the major contributor to the Nigerian GDP, it is only
about 40 percent but it is a big source of revenue for the government.
“We discussed with the President, Vice President and the Minister of
Finance and Minister of Budget how more efficiency, more
transparency, better accountability, the enlarging the base of revenue
could actually contribute to sound budget going forward.
“It is not for me here and now to actually approve or comment on the
budget because we have procedures in the IMF under which a team of
Economists is going
to come next week actually to do what we call the Article 4 which is
to review….good discussion with partners, IMF on one hand,
country’s authorities on the other hand to really access whether
financing is in place, whether the debt is sustainable, whether the
borrowing cost are sensible and what strategy put in place in order to
address challenges going forward.
“But what I certainly mentioned to Mr. President was that his fight
and his determination to fight corruption and his determination to
bring about transparency and accountability at all levels of the economy
are very important agenda item and very ambitious goal that needed
to be deliberated upon which he, himself is definitely committed to as
he indicated this morning and as he inspires his team members.
“With that I am going to have more discussions with the Finance
Minister and the Governor of Central Bank. We will be discussing issue
of fiscal discipline, financing monetary policies and the degree
of flexibility, all that with the fact that Nigeria with a vibrant large
economy still has to deal with poor people, a lot of inequality
and those two components should certainly be the drivers of reforms,
whether it is looking at subsidies and how they are structured and
how they can be phased out, whether it is monetary policy and the
flexibility needed and knowing what effect it has on the poor, all,
of those are ambitions that we could quickly recognize and support.
”Our technical discussions will continue and to those of you who
wonder why the IMF Director is visiting Nigeria. It is precisely to have
good discussion about these new objectives, these reforms agendas
that have been identified and supported by the President and also to
appreciate the impact that it will have on neighbouring
countries because when a country large as Nigeria, anything that it
decides, any hardship that it faces will have consequences around it and
that is what our research and analytical work is demonstrating. Nigeria
is one of those that have impact not just on itself and its people but
around it and its neighbours.”
IMF to Buhari: Make your economic policies flexible
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