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IMF calls for increased structural adjustment in Nigeria

*FG secures fresh foreign investment for infrastructure-Adeosun
*CBN optimistic on impact on reforms

By Gabriel Omoh & Babajide Komolafe, in Washington

International Monetary Fund, IMF, yesterday called on the federal government to make additional structural adjustment and tighter monetary policy so as to address macroeconomic imbalances in the country. Director of the IMF’s African Department, Mr. Abebe Selassie, made this call during a press conference on the African region at the ongoing 2016 annual IMF meeting in Washington, United State.

Meanwhile, the Minister of Finance, yesterday disclosed that the federal government has secured fresh commitment from foreign investors to finance Infrastructure in Nigeria. On his part, Governor of Central Bank of Nigeria, CBN, Mr. Godwin Emefiele said the reforms being implemented will help achieve economic growth in the country.

Nigeria needs increased structural adjustment

Speaking on the measures needed to reduce economic imbalance in Nigeria, Selassie said, “Yes there was that adjustment in exchange rate, but despite that the BDC rate was getting much  weaker. What is necessary to facilitate the reduction in imbalances in simple terms is significant fiscal adjustment. I think that is very important. Especially on the revenue side taking measures to curtail the fiscal deficit will be very important.

“This has to be accompanied by tighter monetary conditions more than we are seeing. I think some of the continued weakness of the naira coming from monetary conditions are not as tight as they could be.

“This has to be accompanied by structural reforms, both fiscal structural issues to try and  improve public finance over the medium term but also a lot of the structural reforms that are needed to force a stronger supply response in the country.

“One good thing for Nigeria is that the level of debt is not very high. So there is room to have a more gradual adjustment. But the issue here is to have in place a credible framework that allows private sector and other financier to step in so as to give government the time to smoother the adjustment.”

Meanwhile, Minister of Finance Mrs Kemi Adeosun has said that some foreign investors have made commitment to invest in infrastructure in Nigeria. Speaking to journalist after a session with the IMF, she said “we had a very good meeting, we had presentations by the World Bank, and also by the managing director of the IMF, on the outlook of the global economy.

We were able to make one or two contributions on behalf of Nigeria, one of which was really the need for accelerated investment in infrastructure, as the way out of our current situation.

“That is what we believe will create jobs, that is what we believe will reduce poverty. We made that intervention and got some commitments from the multilateral agencies, that they will support our investment in infrastructure by using creative financial instrument that will attract more money to add to what we have in the budget to enable us attack our infrastructure gap”.

“They spoke specifically about housing and energy, that is power, that they would support us on how to get concessional money into power. The other issue that was raised is the issue of tax evasion and the fact that we need the multilateral agencies to support us.

The trade is very important, but we need the multilaterals to also support us to ensure that multinational companies that trade in Nigeria specifically, and emerging markets generally pay their fair share of taxes, and that point was well taken.

Supporting the minister Mr. Barkindo OPEC General secretary said there was good prospect for oil recovery. According to him there is “very good prospect, as I explained in my statement, at least we have been able to avert a further price slump, after Algiers, as was widely expected by the markets.

If you recall, before we went to Algiers, the expectations was that it was going to be another Doha, but thank God we have not witnessed that. In fact, since Algiers, we have seen prices, rebounding by almost seven percent, which is very significant, and the momentum is on the upside.

“We at OPEC also submitted our statement, bringing the distinguished group up to recent short term development, including the outcome of our last conference in Algiers, and the immediate prospect.

The Algiers meeting was very positive, not only for Nigeria, but for the entire group, and if you recall, Nigeria, with the Islamic Republic of Iran, and Libya, are being considered as countries undergoing certain special circumstances, as unfortunate as they are. They should therefore not be treated along with the with the other 11 members. This is a big relief to our system, and our colleagues from central bank.”

Adeosun also said  “the intervention is a two-way street of dialogue. They are hearing from us, what we are doing, and we are hearing from them on what’s on offer, and what we have to do now is to go out into individual meetings and actually tie up some of these arrangements and tie them to specific projects, and that is what we’ll be doing in the next few days.

CBN optimistic about impact of reforms

CBN Governor, Mr. Godwin Emefiele  said that Nigeria is already taking the necessary fiscal and monetary steps to restore economic growth. He said, “Basically there is no gainsaying the fact that, that has to be the direction everybody has to go but  I think that we are doing that in Nigeria. There is serious coordination and collaboration between the monetary and fiscal authorities, and I believe that if we continue in this direction, we would achieve that objective.

Basically, there is a lot of networking meetings going on, and I can assure you that meetings are going on with some of our partners, China particularly. We are going into a meeting with Chinese delegation. I know that from the meeting to be held with the Managing Director of IMF as well World Bank Group, we are going to achieve some of the objectives.”


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