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IMF to help Nigeria trace looted funds

By on January 7, 2016

The Managing Director of the International Monetary Fund, Christine Lagarde, said on Tuesday in Abuja that the organisation was willing to assist the Federal Government of Nigeria in plugging revenue leakages, tracing stolen funds and restructuring the tax system.

She also said that Nigeria had all the potential to overcome the current economic challenge of falling commodity prices without resorting to the IMF for financial support.

Lagarde, who is in the country on a four-day working visit, reportedly said this during a closed-door meeting with President Muhammadu Buhari at the Presidential Villa, according to a statement by the President’s Special Adviser to the President on Media and Publicity, Mr. Femi Adesina.

Buhari, on his part, said he had told all heads of Ministries, Departments and Agencies of government that under his leadership, they must give full account of all funds allocated to them.

He said his administration would look inwards, enforce regulations to stop financial leakages and adopt global best practices in generating more revenue to mitigate the effects of dwindling oil prices on the Nigerian economy.

Adesina further quoted the President as saying that his administration would also enforce greater discipline, probity and accountability in all revenue generating agencies of the Federal Government.

Buhari reportedly told Lagarde, “We have just come out of budget discussions after many weeks of taking into consideration the many needs of the country and the downturn in the economy with falling oil prices and the negative economic forecasts. We are working very hard and with the budget as our way forward; we will do our best to ensure that our country survives the current economic downturn.

“We have also told all heads of Ministries, Departments and Agencies of government that on our watch, they will fully account for all funds that get into their coffers.”

The President said that the Federal Government was reviewing its operational costs and had directed all the MDAs to cut down on their overheads.

According to him, the Federal Government will welcome the technical support and expertise of the IMF for its plans to diversify the Nigerian economy and further unleash its growth potential.

After her meeting with Buhari, the IMF boss said with the determination and resilience so far displayed by Buhari and his team, Nigeria did not need any loan from her organisation.

Lagarde said she was not in the country to negotiate loans with the Federal Government.

The IMF boss spoke with State House correspondents shortly after holding a closed-door meeting with Buhari; Vice President Yemi Osinbajo; and some key ministers inside the Presidential Villa, Abuja.

The meeting was also attended by the Minister of Finance, Kemi Adeosun; Minister of Budget and National Planning, Udo Udoma; Minister of Transportation, Rotimi Amaechi; and Minister of Works, Housing and Power, Babatunde Fashola, among others.

Lagarde said although Nigeria did not need IMF loans, fiscal discipline was needed for the country to be sustainable.

She said, “Let me make it clear that I am not here (in Nigeria) nor is my team in this country to negotiate a loan with conditionality. We are not into programme negotiations and frankly at this point in time, given the determination and resilience displayed by the President and his team, I don’t see why an IMF programme will be needed.

“So, of course, discipline is going to be needed; of course, implementation is going to be key for the objectives and the ambition to serve the country well in order for it to be actually sustainable.”

She said the IMF believed that with clear primary ambition to support poor Nigerians, there could be added flexibility in the monetary policy, particularly if the oil price slump continued for a longer period as expected.

She explained that the organisation’s position was that Nigeria should not deplete its reserves simply because of rules that would be exceedingly rigid.

While saying that she was not suggesting that rigidity should be totally eliminated, the IMF boss argued that some degree of flexibility would be enough.

Lagarde observed that since her last visit to Nigeria four years ago, the country had witnessed a number of changes in the areas of democracy and the economy.

She noted that Nigeria had become the largest economy in Africa and the most populated, with a very attractive market.

She, however, regretted that things had changed in a more complicated way in the sense that the source of revenue to the government, which was predominantly crude oil, had seen its price reduced by more than half.

The IMF boss also noted that the financing costs around were beginning to rise because the economic situation in the United States had improved and that interest rates would begin to rise.

On her meeting with Buhari, Lagarde said she and her team had excellent discussions with the President and that they discussed the challenges ahead for the economy stemming from oil price slump.

She said the meeting stressed the necessity to apply fiscal discipline and the need to also respond to the population needs, while addressing the medium term specificities of improving the competitiveness of Nigeria and also focusing on the short term fiscal situation.

This, she explained, required that new revenue sources be identified in order to compensate for the shortfall resulting from oil price decline.

Lagarde noted that as customary, a team of IMF economic experts would arrive the country next week to assess the 2016 budget of the Federal Government.

She said, “Oil is not the major contributor to the Nigerian GDP, it is only about 40 per cent; but it is a big source of revenue for the government.

“We discussed with the President, vice president and the ministers of Finance and Budget how more efficiency, more transparency, better accountability and enlarging the base of revenue could actually contribute to sound budgets going forward.

“It is not for me here and now to actually approve or comment on the budget because we have procedures in the IMF under which a team of economists is going to come next week actually to do what we call the Article 4, which is to review and have good discussion with partners – the IMF on one hand, and the country’s authorities on the other hand.

“This is to really assess whether financing is in place, whether the debt is sustainable, whether the borrowing costs are sensible and what strategy should be put in place in order to address challenges going forward.”

Lagarde said she told the President that his determination to fight corruption and bring about transparency and accountability at all levels of the economy was an important agenda and a very ambitious goal that needed to be deliberated upon.

She said Buhari himself indicated that he was committed to the anti-corruption war and that he would inspire members of his team.

With that in mind, she said she would have more discussions with the Minister of Finance and the Governor of the Central Bank of Nigeria.

Lagarde said, “We will be discussing issues of fiscal discipline, financing monetary policies and the degree of flexibility, with the fact that Nigeria with a vibrant large economy, still has to deal with poor people, a lot of inequality and those two components should certainly be the drivers of reforms.

“Whether it is looking at subsidies and how they are structured and how they can be phased out, whether it is monetary policy and the flexibility needed and knowing what effect it has on the poor, all of those are ambitions that we could quickly recognise and support.

“Our technical discussions will continue and to those of you who wonder why the IMF managing director is visiting Nigeria, it is precisely to have good discussions about these new objectives, these reforms agendas that have been identified and supported by the President, and also to appreciate the impact that it will have on neighbouring countries.”