Reaction to IMF’s Assessment
The Presidency has criticized the International Monetary Fund (IMF) for its harsh assessment of Nigeria’s economic reforms, inflation, and poverty levels. The IMF had released a report titled "How Nigeria Can Unleash Its Economic Potential," which raised concerns over the country’s persistently high inflation rate and slow impact of reforms.
IMF’s Report
The report stated that between 2014 and 2023, real per capita GDP declined on average by 0.7 percent annually, and in 2023, the poverty rate stood at 42 percent. The IMF also noted that the difficult situation was compounded by limited access to dollars, which led to people turning to the parallel currency market and paying higher prices. Additionally, the report mentioned that public finances were strained by an opaque fuel subsidy system, which caused recurrent petrol scarcity, and central bank financing of the fiscal deficit pushed up inflation.
Nigeria’s Reforms
In response to these challenges, Nigerian policymakers have embarked on a series of bold reforms over the last two years. In 2023, the new government and the Central Bank of Nigeria liberalized the foreign exchange market, stopped central bank financing of the fiscal deficit, and reformed fuel subsidies. The government also strengthened revenue collection, which is still one of the world’s weakest. Since these reforms were implemented, international reserves have increased, and anyone can now access foreign exchange in the official market.
IMF’s Recommendations
The IMF recommended a more effective budgetary framework and the need to channel savings from fuel subsidy removal into critical investments. It also advised that once Nigeria’s cash transfer system was fully functional, tax rates could be aligned with regional benchmarks. Furthermore, the IMF asked the Central Bank of Nigeria to maintain a firm stance to reduce inflation and restore confidence in the economy.
Presidency’s Response
Special Adviser to President Bola Tinubu on Economic Affairs, Tope Fasua, reacted to the IMF’s report, stating that the administration has done some of the deepest reforms seen in a while. He mentioned that the tax bills signed into law offer relief to low-income earners and double the tax threshold for small businesses. Fasua criticized the IMF for being overly critical, describing its frequent statements on Nigeria as "heckling" and potentially destabilizing.
Fasua’s Concerns
Fasua disclosed that Nigeria recently repaid $3 billion to the IMF to exit its COVID-19 loan package, which many other countries have not been able to do. He wondered why the IMF continues to pile pressures on Nigeria, stating that the country is not asking for a pat on the back but rather a breather to implement its policies. Fasua also pointed out a contradiction in the IMF’s dual role, noting that its advisory messages often clash with its lending stance.
Conclusion
In conclusion, the Presidency has expressed its disappointment with the IMF’s assessment of Nigeria’s economic reforms. While the IMF has acknowledged the progress made by the country, it continues to demand more, which may be unrealistic. The Nigerian government is working to address the economic challenges, and it is essential to give the country a chance to implement its policies without undue pressure from international organizations like the IMF. By doing so, Nigeria can continue to make progress and improve the lives of its citizens.
