NEWS: NIGERIA - IMF issues tough verdict on Nigeria

Managing director of the International Monetary Fund (IMF), Ms Christine Lagarde, yesterday, issued tough predictions about Nigeria, with a stern warning that the years ahead will be difficult, following the dwindling oil prices at the global market.
Ms Lagarde who made the revelations during a meeting with the President of the Senate, Dr. Bukola Saraki, at the National Assembly complex, also added her voice to previous calls that the contentious fuel subsidy be removed by the federal government.

The IMF chief who had a similar meeting with President Muhammadu Buhari on Tuesday, while acknowledging some significant achievements Nigeria has recorded since her last visit to the country in late 2011, however re-echoed the earlier fears expressed by the global bank that the prices of crude oil will remain low for a long time.

She said the import of the low global oil prices in Nigeria will be the non-availability of funds to meet basic needs of Nigerians and also to provide critical infrastructure for the country.

Lagarde posited: “The move by the government to remove the fuel subsidy is good. Those people who need the subsidy can receive cash transfer. Fuel subsidies are hard to defend. Subsidies are no longer good. But I hear that it will hurt the poor. Forty per cent of fuel subsidies in rich countries go to rich families. The people do not really need the subsidy. Look at the number of people who stay in stations trying to buy fuel.

“There is a small acceleration expected in 2016. Growth in the last ten years has slowed down in Sub-Saharan African countries. Oil prices will remain low and low for a long time. Oil producing countries must factor this in and model their economic policies towards this direction. Nigeria is facing mounting pressure. There will continue to be abundant supply of oil, but low demands. It is very unlikely that we will see any rise anytime soon.

“Private sector investments will be affected. Higher interest rate will continue to rise. Sub-Saharan African countries is facing immense pressure as a result of this. I can feel the hardship and pains as a result of activities of Boko Haram. The resources spent in trying to fight insurgency are supposed to be spent on infrastructure.

“Whatever happens in Nigeria will affect our neighbours because of the trading relationship. There must be a fundamental change in the way government operates. It is not about how to divide proceeds from oil wealth. It is about how to deliver to Nigerians the basic services they deserve. Hard decisions must be made. As the National Assembly considers the 2016 budget, these are the issues they consider.”

Although the IMF boss was careful not to openly endorse the devaluation of naira against major international currencies, she however advised the government to adopt a flexible monetary policy that will better serve the interest of Nigerians.

She said: “Given the structure of the economy, the goal of achieving global competitiveness is tough. More business friendly and sound monetary policies are needed. Flexible exchange rate is needed. I am not talking about devaluation of naira. These factors can strengthen Nigeria’s competitive position globally.”

She also dwelt on the need to build regional cooperation among West African countries. According to the IMF boss, whatever affects Nigeria directly or indirectly affects other countries within the sub region.

“This is always a moment I cherish. My first visit to Nigeria was in late 2011. At that time, Nigeria was emerging from the global economic crisis. Nigeria is the prime destination in Africa. Nigeria has gone through democratic transition which is a good thing. When investors know that transitions can happen successfully, they have more confidence.

“The richness of Nigeria has to do with the population. Nigeria is a huge market and people who are prepared to put their money here looks at the population. Oil prices have fallen sharply. The geopolitical tensions have increased. These things are happening at a time the country needed to lift the standard of living of Nigerians. Nigerians are known for their courage and doggedness. Nigeria cannot waste time. There is no time at all.

“Government must step up revenue mobilization and reduce leakages. Every 50 kobo collected from 30 per cent of the country’s revenue goes into the servicing of local and foreign debts. The government must focus on power, transportation and housing. These three areas will create wealth. They are critically important. Efforts should be made to reduce the cost of governance.

“As I am told, Nollywood currently employs over one million Nigerians. Poverty and inequality still remain high in many parts of the country. Mortality rate is still high,” she added.

Speaking on the need to strengthen institutions of government empowered to corruption-related issues, Ms Lagarde revealed that over $1 trillion was given and received as bribes globally every year. She equally revealed that corruption makes up five per cent of global Gross Domestic Product (GDP).

She advised the National Assembly to come up with laws that will address corruption and block leakages in the system.

“Corruption is touted to be five per cent of the global GDP and over $1 trillion is said to be given as bribes globally every year. Today, Nigeria is looking ahead. The future is greater than the past in Nigeria. But the sooner the government delivers, the better it will be for Nigeria and Nigerians,” she noted.

In his earlier remarks, the Senate President, Saraki, told his visitor that the National Assembly was willing to partner with the global financial body to come up with policies that will benefit Nigeria and Nigerians.

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