Minister of National planning Senator Udo Udoma said in Bali on the sideline of the ongoing IMF/World Bank Group Annual Meetings that the Nigerian government expects the economy to improve to a growth of 2.1 per cent by the end of the fourth quarter of 2018 thus improving the welfare of Nigerians. It will be recalled that the economy grew by 1.9 per cent in the third quarter after emerging from recession. However Nigerians are yet to feel the impact in their welfare. Udoma while speaking with Nigerian journalist in Bali said “We expect that by the end of this year, we will be growing by 2.1 per cent, things are going well in Nigeria, not as well as we want to be, we are working hard to improve things. We are in stronger position than 2015. Our foreign reserves are $44 billion and we have a trading surplus However, we have to keep on growing, we are focused on working and are not be distracted by electioneering. The president has instructed us to remain focused. We are happy IMF has spoken well about Nigeria.
But Head, Emerging Economies Regional Studies Division IMF’s European Department, Anna Ilyina said that Nigeria and other emerging market nations have come under pressure since April. A combination of factors he said have affected emerging market since then. According to him “it started with sharp appreciation in US dollar in the context of rising US interest rates and of course emerging markets are very sensitive to changes to changes in external balancing. So, that affected emerging markets asset class. But those countries that have stronger economic fundamentals and policy frameworks and less external financing have been really less affected. In the case of Nigeria, there is one important driver that always affects its economic condition and that is oil.
Nigeria being an oil exporter is always very sensitive to changes in oil prices. In terms of policy responses, of course flexible exchange rate is the first line of defence. Allowing exchange rate to act as an external measure is healthy to adjust to external environment. Of course, forex intervention might make sense in certain circumstances. But then, one has to consider the growth in fundamentals, the level of reserves and other policy tools that might be more appropriate in country-specific circumstances. “Another thing that I want to mention is that given that we are still at the early stage of monetary policy normalisation in advanced economies, one can expect global external conditions and external balance conditions to remain challenging going forward he said.
On his part the Deputy Director IMF Fiscal Affairs Department, Paolo Mauro said “”indeed, we do see revenue as crucial priority for the country, particularly, increasing non-oil revenue. If one looks at the ratio of interest payments to revenue for Nigeria, that is quite high. And certainly, increasing revenue in the way in which one creates the space to do social spending, infrastructure and other types of spending that benefits economic growth. So, clearly, that is a priority. How does one go about it? We have been discussing over the years with the government. And we see the priorities in tax administration. But there are also aspects of tax policy that would help. So, certainly, in the tax administration, to increase the compliance rate something that could be done is to increase tax audit, to use e-filing to a greater extent, blocking leakages and corruption within the system. In addition, prioritisation of investments is important.
Also in his comment Tobias Adrian, Financial Counsellor and Director at the IMF said “we have seen in recent years increase in countries that issue debt in international capital market. That’s a good thing for development. When debts are raised for infrastructure projects, it is good. But international borrowing will need to be balanced with stability objectives. So , the countries have to make sure that the level of borrowing is sustainable in the long run., to be able to pay both the interest rate and principal, even if there is a change in situation. In the case of Nigeria, the optimism is more on oil prices and it is constrained by how much the favourable price can continue. It could decline at any time. We have some slow down as financial conditions in recent months from emerging markets have tightened, which the country is inclusive. Of course, there is going to be quite bit of need for rollover of debts in 2020 and 2022 and much that the country can do so that the international market would allow the rollover in smooth fashion”.
On Nigeria position in Afreximbank the President of the bank said Nigeria is still a major shareholder of the bank although of recent it has fallen back in terms of its relative position. That is why we had these discussions with the minister of finance to see how Nigeria can return to the position they were and we’ve gotten an assurance that the Nigerian government will look at it and we hope that Nigeria’s shareholding will come to the levels that reflect the size of the Nigerian economy. Every holding of Nigeria is a Nigerian affair in terms of the Nigerian government, they are number three today. They always have been number one or number two. Egypt and Zimbabwe are number one and two but in terms of business in Nigeria, we have exposure of more than $3.2 billion.
Minister of Finance Zainab Ahmed in her comment said “Nigeria is a major shareholder in the bank, part of the things we discussed is the possibility of increasing our shareholding and also we discussed some of the programs and projects Afriexim is supporting in Nigeria. Afriexim has a very large portfolio in Nigeria, about 40 per cent of their portfolio is Nigeria. They provide support to the government but largely to the private sector. “Other things we discussed included setting up a medical park in FCT which is a discussion that has been on going for quite a long time, there is also some quality assurance centres in Ogun and some other parts of the country. We also discussed setting up some industrial parks in partnership with the federal ministry of industry, trade and investment in three centres; Lekki, Kano and Kaduna. “We are looking at it already, you know joining any trade scheme is not something government alone does, we have to consult very closely with the private sector and we are doing that already. When we have a consensus, we will join. That discussion is being driven by the federal ministry of industry, trade and investment. That we will need to consider increasing our shareholding in the bank because there is a lot of value that we are getting from Afriexim bank”