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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.”