Nigeria has not applied for an IMF loan because it is “not sick” – finance minister

ABUJA, April 16 (Reuters) – Nigeria, which is going through its worst economic crisis in years, has not turned to the International Monetary Fund (IMF) for financial assistance because it is “not sick”, its finance minister said.

Africa’s top oil exporter, which has the continent’s biggest economy, has been hit hard by the fall in crude prices since oil sales account for around 70 percent of its income.
The economy grew 2.8 percent last year, its slowest pace in decades, and in March annual inflation rose to a near four year high of 12.8 percent.

Last month the IMF said it had again cut its growth forecast for Nigeria, predicting that gross domestic product growth would slow to 2.3 percent in 2016. It has said it hopes exchange rate limits imposed by Nigeria will be removed.

The central bank has resisted calls to devalue the naira currency, though a Reuters poll this week predicted that a dollar shortage, which has hamstrung businesses that need the greenback for imports, would prompt a devaluation by September.

“Nigeria is not sick and even if we are, we have our own local remedy,” said Finance Minister Kemi Adeosun on Friday at a panel discussion in Washington where she attended spring meetings of the IMF and World Bank.

Adeosun’s spokesman, Festus Akanbi, said the comment was “an apparent response to a question on why the government has refused to apply for IMF loans”.

Discussions between Nigeria and the World Bank are continuing on a possible loan or credit facility that would be tied to policy reforms.

“We have resolved to build resilience into the country’s economy to hedge against future oil shocks. We are doing a combination of things to diversify our economy,” added Adeosun.

Nigeria wants to boost non-oil income by 87 percent to offset the impact of the oil slump and squeeze informal small traders to boost tax revenues by 33 percent, according to government plans seen by Reuters.

President Muhammadu Buhari plans a record 6.06 trillion naira ($30.6 billion) budget to stimulate the economy but he is yet to sign the bill into law due to wrangling with parliament.

Source: Reuters

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IMF Seeks an End to Nigeria Budget Impasse, presses on Currency Devalution

April 15, 2016
– By NairaFX
IMF Managing Director, Christine Lagarde, who speaking at the opening press briefing of the fund at the 2016 Spring Meetings of the IMF-World Bank in Washington D.C., has asked that the Nigerian Federal Government look for assistance from international institutions that have the capacity to aid the Nigerian economy overcome its challenges.

“Our recommendation is that, first, Nigeria seek help from the international institutions that can best help. Second is that Nigeria is open-minded about using flexibility of the exchange rate in order to absorb some of the shocks; we believe that it’s more efficient than using a list of forex items that are barred from being imported into the country.
“And third, we believe that it’s really important that budget be completely decided and approved,” Lagarde said.
The IMF as well as many other global economist have warned that the currency policy of the current administration is unsustainable. Some have also recommended a two tier Forex market system although critics of that decry the opportunities for corruption to rise as a result of said two tier system.
Lagarde continued to encourage Nigeria and Nigerians to seek economic diversification in the long run as near total dependence on oil revenue is dangerous for economy.
Lagarde said, “The low price of oil is general but low price of oil as far as Nigeria is concerned is a critical issue. Sixty per cent of your exports and 80 per cent of your revenue or the other way round is actually oil dependent.
“So when there is a massive decline in the price of oil, those two also take a similar beating; it has a major impact on the country.”