Visitors are silhouetted against the logo of the International Monetary Fund (IMF) at the main venue for the IMF and World Bank annual meeting in Tokyo October 10, 2012.
The IMF said that it has again cut its growth forecast for Nigeria as the oil exporter faces “substantial challenges” from low crude prices.
In its annual review of Nigeria’s economic situation, the IMF said that gross domestic product growth would slow to 2.3 per cent in 2016 from an estimated 2.7 per cent in 2015.
In February, after IMF officials visited the country, the Fund had forecast 3.2 per cent growth for Nigeria in 2016.
“Key risks to the outlook include lower oil prices, shortfalls in non-oil revenues, a further deterioration in finances of state and local Governments, deepening disruptions in private sector activity due to constraints on access to foreign exchange, and resurgence in security concerns,” the IMF said in a statement.
It added that Nigeria’s Federal government deficit would grow further after doubling to 3.7 per cent of GDP in 2015, reports Reuters.
The IMF executive board said Nigeria needed to urgently implement policies to safeguard fiscal sustainability, reduce external imbalances and advance structural reforms that promote more inclusive growth.
The Directors emphasised the critical need to raise non-oil revenues to ensure fiscal sustainability while maintaining infrastructure and social spending.
“They urged a gradual increase in the VAT rate, further improvements in revenue administration, and a broadening of the tax base.”
Discussions between Nigeria and the World Bank are continuing on a possible loan or credit facility that is tied to policy reforms in the West African oil exporter, a spokesman for the Washington-based multilateral lender said.
Meanwhile, the IMF has published a paper on global financial safety net. The paper titled: “The Adequacy of the Global Financial Safety Net,” was what the IMF’s Executive Board discussed during an informal session as part of the Fund’s ongoing review of the international monetary system.
The paper assesses the strengths, weaknesses and challenges of the Global Financial Safety Net (GFSN) –comprised of international reserves, central bank swap arrangements, regional financing arrangements, Fund resources (complemented by other multilateral and bilateral development partners), and marketbased instruments.
According to a statement issued by the Fund: “The paper establishes that the GFSN is much larger and more multilayered than before, reflecting the accumulation of reserves, the expansion of bilateral and multilateral arrangements, and greater access to Fund resources”.