3 Reasons IMF Does Not Want To Offer Nigeria Loan
Nigeria’s woes appear to be getting compounded. The International monetary fund, IMF has said it may not lend it the money it needs to fund the 2017 budget.
According to the 68-page report sighted by Reuters news agency, here are at least 3 reasons the fund is not willing to bail Nigeria out.
1.IMF Wants Nigeria To Remove Foreign Exchange Restrictions: Nigeria currently faces severe foreign exchange crisis. As a result, the Central bank of Nigeria imposed restrictions on access to foreign currencies to import some items. The apex bank has also prioritized access to foreign exchange to favour some manufacturers and importers of petroleum products.
In the past few weeks, the CBN has also strongly intervened in the foreign exchange market, pumping in millions of dollars to help prop up the value of the naira which weakened to all time low of 520 Naira per dollar in the black market in February.
Now, the IMF has said if Nigeria did not remove foreign exchange restrictions and unify the exchange rates, it risked "further deterioration in (forex) reserves" and "a disorderly exchange rate depreciation".
2. Nigeria Is Over-Dependent On Oil: IMF does not like the fact that Nigeria remains over-dependent on oil as major source of revenue. In the report, IMF said Nigeria should tackle its over-dependence on oil. It also wants Nigeria to increase its revenue and find ways to deal with a large infrastructure deficit, a rising debt service and double-digit inflation.
3.IMF Wants Nigeria To Review Its Economic Recovery and Growth Plan: Nigeria launched an Economic Recovery and Growth plan early this month. The three-year plan is expected to get the country out of recession.
But the IMF report said the plan offers few concrete steps.
It noted that the Economic Recovery and Growth Plan "does not explicitly call for tighter monetary and fiscal policy in the near term, and assumes no immediate change in exchange rate policy - all of which are essential to reduce vulnerabilities and increase investors' interest".
The report said Nigeria should articulate a sustainable fiscal policy and adopt structural reforms to diversify the economy away from its dependence on oil and promote competitiveness