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IMF

Nigeria To Drop From 1st To 4th Largest Economy By End Of 2024 – IMF

by Victor Ndubuisi June 7, 2024

written by Victor Ndubuisi 1 minutes read

The International Monetary Fund (IMF) has projected that by the end of 2024, Nigeria will no longer be the largest economy in Africa, falling to the fourth rank.

With an anticipated GDP of $253 billion, the IMF predicts that Nigeria will lag behind South Africa, Egypt, and Algeria.

This information was found in a report published on X by AfreximBank, highlighting the upcoming economic difficulties that Nigeria may suffer.

IMF Predicts Improved Nigeria’s Growth Rate By 2.7% In 2022

Nonetheless, this research blames Chief Bola Ahmed Tinubu’s declining leadership style, whose punitive economic policies have caused a large-scale departure of foreign businesses from Nigeria.

Nigeria confronts significant challenges in keeping its status as the continent’s top economic powerhouse, even in the face of initiatives to spur growth and draw in international investment.

June 7, 2024

How Electricity Tariff, Fuel Price Below Cost Recovery will Affect GDP – IMF

by Victor Ndubuisi March 5, 2024

written by Victor Ndubuisi 2 minutes read

According to recommendations from the International Monetary Fund (IMF), Nigeria’s fiscal costs might amount to 3% of GDP if fuel prices and electricity tariffs are capped below cost recovery.

This morning, the Country Office in Abuja released the report of the recently ended Staff Article IV Consultations, which included the warning.

“Capping fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to 3% of GDP in 2024,” the IMF states.

IMF Enlists Nigeria Among Nations With Least Food Security

From February 12–23, 2024, a team led by Axel Schimmelpfennig, the IMF mission chief for Nigeria, travelled to Lagos and Abuja to have talks in preparation for the 2024 Article IV Consultations with Nigeria.

The employees recommended that the federal government put social safety nets through the cash-transfer programme before addressing the fuel subsidies and electricity tariffs below cost recovery.

According to the report, “Recently approved targeted social safety net program that will provide cash transfers to vulnerable households needs to be fully implemented before the government can address costly, implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected.

“Nigeria’s economic outlook is challenging. Economic growth strengthened in the fourth quarter, with GDP growth reaching 2.8 per cent in 2023.

IMF Forecasts 3.2% GDP Growth In Nigeria

“This falls slightly short of population growth dynamics. Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 per cent, although high inflation, naira weakness, and policy tightening will provide headwinds.

“With about 8 per cent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority.

March 5, 2024

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IMF Asks Tinubu Govt To Prioritise Rising Food Insecurity

by Victor Ndubuisi March 5, 2024

written by Victor Ndubuisi 2 minutes read

The Nigerian government’s first priority should be to eliminate food insecurity, according to the International Monetary Fund (IMF).

After the IMF Staff 2024 Article IV Mission to Nigeria concluded on Tuesday in Abuja, this claim was made in the IMF’s End-of-Mission statement.

The statement claims that low growth, insufficient revenue collection, rising inflation, and persistent external imbalances were the difficult economic conditions the Nigerian administration inherited.

IMF Enlists Nigeria Among Nations With Least Food Security

“Addressing food insecurity is the immediate priority.

”The recent approval of a well-targeted and effective social protection system is an important step toward addressing food insecurity in Nigeria and implementation will be crucial,” it said.

The Monetary Policy Committee’s (MPC) decision to tighten monetary policy was also supported by the IMF, which noted that doing so might reduce inflationary pressures and stabilise the Naira.

As part of the 2024 Article IV Consultations with Nigeria, talks took place in Lagos and Abuja from February 12 to February 23, 2024, under the direction of Axel Schimmelpfennig, IMF mission chief for Nigeria.

Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, and Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), were two of the important participants in these talks. Senior government officials, representatives from subnational organisations, the private sector, the Ministries of Agriculture and Environment, and Civil Society Organisations also participated in the consultations.

How $3.4 Billion IMF Loan ‘Vanished’ Under Buhari’s Govt – Shehu Sani

The statement read in part, “Nigeria’s economic outlook is challenging. Economic growth strengthened in the fourth quarter, with Gross Domestic Product (GDP) growth reaching 2.8 per cent in 2023. This falls slightly short of population growth dynamics.

”Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 per cent, although high inflation, naira weakness, and policy tightening will provide headwinds.

“With about eight percent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority. In this regard, staff welcomed the authorities’ approval of an effective and well-targeted social protection system.

“The team also welcomed the government’s release of grains, seeds, and fertilizer, as well as Nigeria’s introduction of dry-season farming.”

March 5, 2024

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Nigeria Advocates for Debt Relief at World Bank/IMF Summit

by Ikem Emmanuel October 12, 2023

written by Ikem Emmanuel 2 minutes read

Nigeria, alongside other nations within the G-24 group, has intensified its call for debt relief, particularly among African countries, during the ongoing World Bank/IMF summit in Morocco. Finance Minister Wale Edun and his counterparts have urged for increased concessional lending, with a focus on supporting investments in global public goods and sustainable development initiatives like affordable access to water and energy resources.

Speaking at the Africa Group 1 Constituency Meeting, Mr. Wale Edun emphasized the need for an “efficient debt resolution framework” to support post-pandemic recovery. He also welcomed Zambia’s debt restructuring agreement and called for swift resolution mechanisms for Ethiopia and Malawi.

Furthermore, Edun advocated for the “elimination of export restrictions on fertilizer and grains, avoidance of protectionist policies, and the leveraging of normalized supply chains and shipping costs to revitalize global trade.”

The G-24, or the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development, serves a crucial role in coordinating the positions of developing countries concerning monetary and developmental matters within the Bretton Woods Institutions (BWI).

The debt situation in African countries is a growing concern. Abebe Selassie, the Director of the African Department, highlighted that approximately 50% of total debts in Sub-Saharan African countries are domestic. During the ongoing IMF/World Bank Annual Meetings, he discussed the challenge of debt forgiveness.

The IMF has provided $80 billion in loans to Sub-Saharan African economies since 2020 for emergency funding and Special Drawing Rights (SDR) allocations.

The G-24 has issued a set of demands during the IMF and World Bank meetings, emphasizing the burden of unsustainable debt and the difficulty in repaying borrowed funds among its members. While acknowledging the G-20 Common Framework, a debt relief initiative by G-20 countries, the G-24 pointed out that some of the world’s poorest and most vulnerable nations are not benefiting from this debt relief program.

The backdrop to this discussion is the increasing struggle with debt that many African countries are facing, with the World Bank’s latest report, “Africa Pulse,” noting that around 21 countries on the continent are at risk of debt default. Several nations, including Ghana, Egypt, Ethiopia, and Kenya, have grappled with debt challenges since the onset of the pandemic.

For context, Nigeria’s Debt Management Office (DMO) reports that the nation’s public debt currently stands at N87 trillion, with foreign debt accounting for N33.24 trillion.

October 12, 2023

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IMF Reveals How Stable Forex, Low Inflation Will Attract FDI To Nigeria

by Victor Ndubuisi September 27, 2023

written by Victor Ndubuisi 1 minutes read

According to the International Monetary Fund (IMF), reduced inflation and stable currency rates will draw more foreign investment into Nigeria.

This was revealed on Tuesday during an interview on Arise Television with Ari Aisen, the IMF representative in Nigeria.

He reaffirmed his support for the elimination of fuel subsidies and the unification of exchange rates, stating that doing so would improve Nigeria’s economic prospects.

Inflation: Central Bank Of Nigeria Raises Interest Rates To 15.5%

According to Arisen, if inflation declines, exchange rates become more predictable, opening the door for prospective investment into Nigeria.

He also mentioned that the country’s GDP growth has been moderate, which was to be expected given the increased cost of fuel and inflation.

“After the position that needs to be well managed to avoid potential reversal, policies of subsidizing fuel and controlling exchange rate will lead to a much better outlook for the Nigerian economy,” he said.

According to the National Bureau of Statistics, Nigeria’s headline inflation rate for August was 25.80%, according to Anaedoonline.ng.

September 27, 2023

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IMF: Post-COVID Fiscal Boost Fueled Inflation

by Mercy Ulasi March 3, 2023

written by Mercy Ulasi 1 minutes read

The study stated, in part, that the combination of a stronger-than-expected demand recovery, increased demand clogging supply networks, sectoral swings in demand, and a hot labor market provided a persuasive postmortem explanation for continually missing the inflation bout. With the advantage of hindsight, we are unquestionably wiser.

“When a vehicle speeds up, the vision field may compress, hiding risks in the distance. One odd aspect of the 2020 pandemic policy reaction was the vigorous economic boost, which some observers claimed mirrored wartime expenditures. Significantly, the forecasters’ knowledge set at the time included this stimulation.

2023: I’m Happy With Tinubu-Shettima Combination – Kwankwaso

According to the report, too small a dose of fiscal stimulus would have risked prolonged scarring, just as doing too much also risked overstimulating the economy and sparking inflation.

Going forward, the IMF said the inflation outlook should better integrate the impact of fiscal policy, particularly in an environment where supply constraints amplify the impact of excess demand on inflation.

“Policymakers could have been advised to reduce their speed somewhat back in 2020 given the danger that was lurking down the road. But this remains a partial assessment. Only by comparing it with the counterfactual scenario of deep scarring can we really gauge the adequacy of the policy choices made back then,” the report read further.

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March 3, 2023

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IMF Enlists Nigeria Among Nations With Least Food Security

by Echezona obinna February 8, 2023

written by Echezona obinna 2 minutes read

Nigeria was named one of the countries with the lowest level of food security by the International Monetary Fund on Wednesday.

This was revealed by the organisation in its just finished Article IV engagement with Nigerian authorities.

“The spillover consequences of the war in Ukraine, which have been conveyed mostly through higher domestic food costs, have exacerbated the effects of the epidemic, particularly on the most vulnerable—with Nigeria among the countries with the lowest food security,” it stated.

It further stressed the need of improving the performance of the agricultural sector for job creation and food security.

IMF Predicts Improved Nigeria’s Growth Rate By 2.7% In 2022

The IMF noted the oil industry is faced with drawbacks from production and price volatility, while climate-related natural disasters create the same risk to agricultural production.

It advised the Nigerian authorities to ensure delivery on its responsibility to remove fuel subsidies by mid-2023, as part of plans to boost well-targeted social spending.

The IMF advised the Central Bank of Nigeria to be prepared to increase the monetary policy rate if needed, and also include additional plans for financing its fiscal deficits and phasing out credit intervention programs.

It implored the government to conclude securitisation of the apex bank’s existing overdrafts stock to the federal government and emphasized that the apex bank’s budget financing should strictly adhere to the statutory limits.

Despite saluting the expansion of Nigeria’s economic recovery, the IMF lamented that the chance to enjoy the benefits from higher global oil prices was missed.

February 8, 2023

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Remove Fuel Subsidy By June, IMF Tells Nigeria

by Echezona obinna February 8, 2023

written by Echezona obinna 2 minutes read

The Federal Government has been encouraged by the International Monetary Fund to fulfil its pledge to end fuel subsidies by the middle of 2023.
According to the IMF, in order to establish the necessary policy space, secure the public debt, and lessen risks, the government must implement ambitious fiscal reforms.

This was revealed on Wednesday by the Washington-based lender in a document titled “IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria” that was posted online.

It noted that despite higher oil prices, it was predicted that the country’s fiscal deficit had grown even more in 2022, primarily as a result of high fuel subsidy expenses. Furthermore, while the current account may have improved in 2022 due to pressure from capital outflows, foreign currency reserves actually decreased.

According to the report, Nigeria has missed out on the opportunity to reap the benefits from higher global oil prices in 2022. It said the government needs to take decisive fiscal and monetary tightening to secure macroeconomic stability, combined with structural reforms to improve governance, strengthen the agricultural sector, and boost inclusive, sustainable growth.

IMF Forecasts 3.2% GDP Growth In Nigeria

The IMF said, “Directors highlighted the need for bold fiscal reforms to create needed policy space, put public debt on sound footing, and reduce vulnerabilities.
“They urged the authorities to deliver on their commitment to remove fuel subsidies by mid-2023, and to increase well-targeted social spending. Strengthening revenue mobilization, including through tax administration reforms, expanding the tax automation system and strengthening taxpayer segmentation, and improving tax compliance is also a priority.
“In the medium term, Directors recommended modernizing customs administration, rationalising tax incentives, and raising tax rates to the levels of the Economic Community of West African States.”
The global lender further said the Nigerian economy had recouped the output losses sustained during the COVID-19 pandemic supported by favourable oil prices and buoyant consumption activities. It added despite this, the spill over effects of the war in Ukraine, have resulted in higher domestic food prices, worsening the scarring effects of the pandemic, particularly on the most vulnerable Nigerians.

This is not the first time the IMF would be advising the Federal Government to remove fuel subsidy. In its 2022 Article IV report, it said, “Directors also urged the removal of untargeted fuel subsidies, with compensatory measures for the poor and transparent use of saved resources.
“They stressed the importance of further strengthening social safety nets.”

February 8, 2023

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IMF Forecasts 3.2% GDP Growth In Nigeria

by Echezona obinna January 31, 2023

written by Echezona obinna 3 minutes read

According to the International Monetary Fund, actions taken to alleviate insecurity in the oil sector will cause Nigeria’s economy to increase from 3.0 percent in 2022 to 3.2 percent in 2023.
This information was provided by the IMF in its World Economic Outlook Update report (January 2023) According to the report, growth in sub-Saharan Africa will slow to 3.8% in 2023 due to the long-lasting effects of the COVID-19 pandemic.

The GDP of South Africa will contract from 2.6% in 2022 to 1.2% in 2023.

It said, “In sub-Saharan Africa, growth is projected to remain moderate at 3.8 per cent in 2023 amid prolonged fallout from the COVID-19 pandemic, although with a modest upward revision since October, before picking up to 4.1 percent in 2024.
“The small upward revision for 2023 (0.1 percentage point) reflects Nigeria’s rising growth in 2023 due to measures to address insecurity issues in the oil sector. In South Africa, by contrast, after a COVID-19 reopening rebound in 2022, projected growth more than halves in 2023, to 1.2 percent, reflecting weaker external demand, power shortages, and structural constraints.”

The Washington-based lender explained that growth in the global economy will slow down in 2023 before bouncing back in 2024. This is as the global fight against inflation and Russia’s war in Ukraine weigh on activity.

IMF: Economic Outlook For 2021 Not Good

Growth is forecasted to slow from 3.4 per cent in 2022 to 2.9 per cent in 2023, then rebound to 3.1 per cent in 2024.
According to the money lender, its January forecast is a lot less gloomy than its October forecast and could hint at a turning point, with growth bottoming out and inflation declining.

It said, “Economic growth proved surprisingly resilient in the third quarter of last year, with strong labour markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe.

“Inflation, too, showed improvement, with overall measures now decreasing in most countries—even if core inflation, which excludes more volatile energy and food prices, has yet to peak in many countries.

“Elsewhere, China’s sudden re-opening paves the way for a rapid rebound in activity. And global financial conditions have improved as inflation pressures started to abate. This, and a weakening of the US dollar from its November high, provided some modest relief to emerging and developing countries.”

Recently, the United Nations projected that a robust commodities trade and dynamic consumer goods and services markets would push Nigeria’s economic growth to three percent in 2023.

In its own prediction for 2023, the World Bank stated that the Nigerian economy would grow at 2.9 per cent in 2023.
In 2022, crude oil production in Nigeria nosedived because of the activities of pipeline vandals and oil thieves. Production crashed to a low of 0.937mbpd in September 2022 but rebounded to 1.235 million barrels per day in December 2022.

January 31, 2023

15% Of Low-Income Nations Are In Debt Crisis – IMF

by Echezona obinna January 17, 2023

written by Echezona obinna 2 minutes read

According to the International Monetary Fund, 15% of low-income nations are already experiencing debt crisis.

According to Nairametrics, the IMF stated in a new report titled “Confronting Fragmentation Where It Matters Most: Trade, Debt, and Climate Action” that a further 45% of the population is further at high risk of debt distress.

According to the paper, many nations struggle with debt, and fragmentation will make it more difficult to address sovereign debt problems, particularly if important government creditors are split along geopolitical lines.

According to a research by Nairametrics, the IMF observed that roughly 25% of emerging countries are at high risk and are dealing with borrowing spreads that resemble defaults.

The monetary body said that there were signs of progress on the Group of Twenty’s Common Framework for debt treatment.
It said while Chad recently reached an agreement with its official and private creditors, Zambia was progressing toward a debt restructuring. Ghana also reportedly became the fourth country to seek treatment under the Common Framework, sending a signal that it had seen as an important pathway for debt resolution.

Nigeria, Ghana 68 Other Countries Get $99b IMF Cash

According to the IMF, countries seeking debt restructuring under the Framework will need greater certainty on processes and standards, as well as shorter and more predictable timelines, reports Nairametrics.
For countries not covered by the framework, however, the report partly said, “To support these improvements, the IMF, World Bank and Indian G20 presidency are working with borrowers and public and private creditors to quickly establish a global sovereign debt roundtable, where we can discuss current shortcomings and make progress to address them.

“These and other pragmatic actions, such as further progress on majority voting provisions in sovereign loans and climate resilient debt clauses, can help improve debt resolution. That would reduce economic and financial uncertainty while helping countries get back to investing in their future.”

January 17, 2023

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