BY MARK ITSIBOR, Abuja and BUKOLA IDOWU, Lagos
The International Monetary Fund (IMF) has tied Nigeria’s economic growth to sincere implementation of the nation’s recently launched economic recovery growth plan (ERGP) 2017- 2020.
According to it, consistent and comprehensive implementation of the ERGP will be a good way forward for the country’s economy
IMF made the remark on the sidelines of the presentation of Regional Economic Outlook for Sub-Saharan Africa tagged: ‘Restarting the Growth Engine’.
At a joint press briefing with the Minister of Finance, Kemi Adeosun and Central Bank Governor, Godwin Emefiele, in Abuja yesterday, the Fund’s director of African department, Mr. Abebe Selassie, maintained that implementation of the ERGP was very key to rebounding of the economy.
IMF had endorsed the EGRP at the IMF/World Bank Spring meetings recently held in Washington DC.
It said Nigeria’s inflation rate will remain elevated at 17.5 per cent, with projected fiscal deficit depreciation to 5 per cent, just as it restated its earlier projection of 0.8 per cent real GDP growth for the economy in 2017.
The Fund said trade balance will grow to 1.5 per cent, while M2 growth is projected at 19.2 per cent and M2/GDP ratio to grow at 23.1 per cent.
It predicted that reserves to months of import cover will drop to 5.5 months, putting current account surpluses at 1 per cent of GDP.
CBN governor Emefiele, corroborated IMF’s stance when he noted that the potential risk mitigating factors for the economy remained full implementation of on-going reform initiatives and a well-articulated debt strategy to finance the ERGP, which he said could provide sufficient headroom for steering the economy to sustainable growth path.
Emefiele emphasised that for Nigeria to witness the expected growth, “fiscal-monetary policy coordination is not optional by a must.
“The imperative for a tax regime that reduces the secondary deficit, strengthen the policy space, facilitates inclusive growth and effective management of risks”, he added.
Against IMF’s prediction, Emefiele said, “Inflation should slow, following the narrowing of the savings investment gap”.
He also said resolution of the Niger-Delta crisis is expected to make headroom for higher oil exports, thus improving the fiscal space, while the forex reforms are expected to stabilise the currency and conserve external reserves to levels higher than the IMF projected 5.5 months of import cover.
Responding to the issues, the minister of finance, Kemi Adeosun said the federal government is implementing “quality policies” to return the economy to growth.
Adeosun said, “Is it the right policy? Yes. We are doing the right things. We are trying to do suggestive fiscal consolidation – investment in infrastructure; all the things that can keep our economy growing again is what we are doing.
“The ERGP is now out – it’s now for implementation. We are very confident that the budget signing is days away from now. We are ready to begin capital releases to continue the stimulus. And we will continue until the economy really returns to growth”.
Mrs. Adeosun added that the government is “engaging with the private sector in the area of infrastructure to see how we can partner together to get private money into the central area of infrastructure”.
On the debt profile, the finance minister noted that Nigeria’s debt to GDP is actually lower than the average. “Our problem is the debt servicing. Our debt servicing is relatively high, a situation she blamed on the short-term nature of most Nigerian debts”, she added.
On his part, Prof. Doyin Salami from the Lagos Business School said African governments should ensure that Africans can see and take advantage of economic opportunities.
“Governments should provide education and security for their citizenry with a focus to improve on technology advancement and human capital development”, he said.
Meanwhile, the International Monetary Fund (IMF) has said there will be a recovery in Sub-Saharan Africa’s economic growth this year, rising slightly to 2.6 per cent after a more than two-decade low in 2016 when commodity exporters faced lower prices.
IMF, in its regional economic outlook, said the slight rebound will be driven by a recovery in oil production in Nigeria, higher public spending ahead of elections in Angola, and the fading of drought effects in South Africa.
Noting that a modest rebound in growth to 2.6 percent was expected for the region in 2017, the IMF said, “Even that rebound will be to a large extent driven by one-off factors in the three largest countries.
“Unfortunately, this deteriorated outlook is partly a result of delayed and still limited policy adjustments, with an ensuing increase in public debt, declining international reserves and pressures on financial systems placing stress on private sector activity”.
The IMF in the outlook stated that with policies behind the curve, pressures on sovereigns rising and spillovers to the private sector intensifying, the near-term outlook for growth in the region is foreseen to remain subdued.
The Fund stated: “The modest rebound in aggregate growth—to 2.6 percent in 2017 in our baseline—is expected to be driven to a large extent by a mitigation of adverse circumstances that caused growth to slump sharply in the largest countries in 2016 (Table 1.1): Reflecting some idiosyncratic developments, the three largest economies, Angola, Nigeria, and South Africa are expected to contribute about three-quarters of the regional rebound.
“Following a deep recession, economic activity in Nigeria is expected to recover, with growth forecast at 0.8 percent on the back of higher oil production—if relative peace in the Niger Delta can be maintained—and strong agricultural production”.
The IMF however said resource-rich Nigeria, Angola and Central Africa’s six-nation CEMAC bloc are still struggling to deal with the losses caused by low oil prices.
“The overall weak outlook partly reflects insufficient policy adjustment”, Director of the IMF’s African Department, Abebe Aemro Selassie, stated, adding that this was holding back investment.
The outlook also raised concerns over the rising public sector debt in the region, saying “the ratio of public debt to GDP has increased by some 10 percentage points since 2014 to an average of 42 percent of GDP in 2016 (and a median of 51 percent).
“This is the highest value since many countries received debt relief in the 2000s under the Heavily Indebted Poor Countries/Multilateral Debt Relief Initiative”, it added.