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Reassess your monetary, fiscal policies – IMF tells Nigeria

By on January 30, 2015

The Managing Director of the International Monetary Fund, Christine Lagarde, has advised Nigeria to re-examine its fiscal and monetary policies immediately after elections to see if further action was needed after the government took steps to rein in spending and adjusted interest rates in November.

She said this was necessary in view of the fall in oil prices, which has hurt the country’s revenue.

Bloomberg quoted Lagarde to have stated this in an interview in the Rwandan capital, Kigali on Wednesday.
The country hasn’t asked for financial assistance from the IMF, which would be willing to extend further technical support to the country if requested, she said.

“Shortly after the elections the authorities will have to reassess the situation in view of the continued decline of oil prices to see if more needs to be done,” said Lagarde. “They may have to take more measures.”

Also, the IMF boss urged African nations to cut fuel subsidies and oil exporters curb spending as a slump in crude prices takes its toll on governments’ revenue.

An almost 60 percent drop in oil prices since June has forced policy makers in Nigeria, Africa’s biggest crude producer, to devalue the currency, raise interest rates to a record and consider shaving the 2015 budget by 8 percent.

Nigeria recently reduced the price of PMS by N10, to N87 per litre, from N97 per litre.

Subsidising countries “should think about reducing and phasing out the oil subsidies, taking advantage of the oil price and using public finance more wisely than in undifferentiated energy subsidies,”

“For the exporting countries that are clearly taking a hit on both accounts of reduced trade revenues and reduced public revenues, they have to be very cautious with public spending, and reduce what can be reduced and use whatever is left over as buffers.”

The IMF last week lowered its 2015 economic-growth outlook for sub-Saharan Africa to 4.9 percent from a previous estimate of 5.8 percent in October, citing “shocks” to oil-producing economies from falling prices.
The growth forecast for Nigeria, the continent’s largest economy, was lowered to 4.8 percent from 7.3 percent.