The IMF says that in the course of the consultation, executive directors commended the authorities for developments in boosting Nigeria’s economic diversification and for their macroeconomic response to falling export prices.
In a press release the IMF Executive Board stated: “Directors noted, however, that vulnerabilities remain high in view of the uncertainties about oil price, security, and the political situation, and concurred that additional policy adjustments and broader structural reforms will be necessary in the period ahead to reconstitute buffers, mitigate risks, and meet pressing development needs”.
The directors agreed that tightening fiscal policy and allowing the exchange rate to run down while using some of the reserve buffer, were befitting to address the recent fall in oil prices.
The statement says: “Nonetheless, Directors stressed that achieving the authorities’ fiscal targets will require a careful prioritization of public spending and a cautious implementation of capital projects.”
The IMF is sure that mobilising extra non-oil revenues is required to open up fiscal space and improve public service delivery over the medium term. They also expressed enthusiasm towards ongoing initiatives to strengthen tax administration, and encouraged the authorities to keep social development in check.
The IMF also noted that its directors welcomed the recent merger of the foreign exchange rates, as better exchange rate flexibility could help reduce the effect of external shocks.
The IMF had said in December last year that it expected Nigeria’s growth rate to slow to about 5% in 2015 from 6.1% in the third quarter of 2014, due to the effect of falling global oil prices on revenues and spending.
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