Nigeria has no need for loans, says IMF

Vice President Yemi Osinbajo (left-front row); President Muhammadu Buhari; visiting IMF Managing Director, Christine Lagarde; Central Bank Governor, Godwin Emefiele; Transport Minister Rotimi Amaechi (left-back row) and Works, Power and Housing Minister, Babatunde Fashola, at the Presidential Villa Abuja…yesterday PHOTO: PHILIP OJISUA
• Lagarde insists economic policies on course
• President pledges to meet challenges of dwindling oil price
• TUC cautions against adoption of financial institution’s ideas
RATHER than agonise over the nation’s economic future, Nigerians should look forward with optimism. And to achieve this future, Nigeria does not need to borrow. This was the position of the visiting Managing Director of International Monetary Fund (IMF), Christine Lagarde as she declared that measures so far taken by President Muhammadu Buhari’s government to revive the economy were quite promising.
But she noted that Nigeria needed to show more flexibility and stronger discipline in the implementation of its fiscal policies.
And faced with the grim realities of the downturn of the economy, Buhari has assured that his administration would look inwards, enforce regulations to stop financial leakages and adopt global best practices in generating more revenue to mitigate the effect of dwindling oil prices on the economy.
A statement from his spokesman, Femi Adesina, in Abuja quoted the president as making the assertion while receiving Lagarde at the Presidential Villa, Abuja.
Meanwhile, the Trade Union Congress of Nigeria (TUC) has warned against Nigeria adopting policies that will further impoverish the people.
A statement by the TUC President, Bobboi Kaigama and Secretary General, Musa Lawal, yesterday said the Federal Government must beware of what agreements it reached with the IMF on how to run the economy of the country.
Lagarde spoke after meeting with the president and his economic team including Vice President Yemi Osinbajo and the Minister of Finance, Kemi Adeosun, her counterpart in the Budget and National Planning, Udoma Udo Udoma and the Central Bank of Nigeria (CBN) Governor Godwin Emefiele.
She used the occasion to clear the air about the public perception of IMF as an anti-people institution, noting that her visit to the country along side her team was to work with the leadership to come out with the appropriate fiscal mechanism that would help the economy.
She said her admonition to the Nigerian government was against the background of dwindling oil price and the need to support the poor, noting that her discussion with the Buhari economic team was within the context of the country being the largest economy in Africa. She noted that, therefore, the economic agenda of the Buhari administration was the issue in focus, especially because of the impact any policy somersault would have on the neighbouring countries in the West African sub-region.
She disclosed that IMF’s evaluation team would visit the country next week to scrutinise the 2016 budget currently before the National Assembly with a view to coming out with a response and guide the country accordingly, noting that the fund had no policy of interference with how member-countries run their fiscal policies.
She dismissed speculations that the fund came to negotiate on how Nigeria may obtain fresh loans with stringent conditions, noting that Nigeria had no need for loans, though insisting that the administration must work on fiscal discipline.
Her words: “First, let me make it clear that I’m not here nor is my team in this country to negotiate a loan with conditionalities. We are not into programme negotiations and frankly at this point in time, given the determination, resilience displayed by the president and his team, I don’t see why an IMF programme will be needed.
“Of course, discipline is going to be needed as implementation is going to be key for the objectives and the ambitions to serve the country well, in order for it to be actually sustainable.  We believe that with a very clear primary ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if as we think, the price of oil is likely to be possibly low for longer, because clearly the authorities should not deplete the reserves of the country, simply because of rules that will be exceedingly rigid. I’m not suggesting that the rigidity be totally removed, but some degree of flexibility will be enough.”
The IMF boss said she discussed with Buhari “the challenges ahead stemming from oil price reduction, the necessity to apply fiscal discipline and the need to also respond to the population’s needs while addressing the medium-term specificities of improving the competitiveness of Nigeria and yet also focusing on the short-term fiscal situation which requires that revenue sources be identified in order to compensate the shortfall resulting from oil price decline.
“Oil is not the major contributor to the Nigerian Gross Domestic Product (GDP); it is only about 40 per cent but it is a big source of revenue for the government.
Therefore, we discussed with the president, vice president and the minister of finance and minister of budget how more efficiency, more transparency, better accountability, the enlarging the base of revenue could actually contribute to sound budget 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 the budget and hope that they will have good discussion with partners, IMF on one hand and the country’s authorities on the other hand.
But what I certainly mentioned to the president was that his determination to fight corruption and his determination to bring about transparency and accountability at all levels of the economy are very important agenda items and very ambitious goal that needed to be deliberated upon which he, himself is definitely committed to as he indicated this morning and as he inspires his team members.”
Largarde who said she would have further discussions with the finance minister and CBN governor on the issue of fiscal discipline, financing monetary policies and the degree of flexibility, noted that though Nigeria had a large, vibrant economy, “the nation still had to deal with poor people, a lot of inequality and those two components should certainly be the drivers of reforms.”
She described as outdated, insinuations that IMF was all about prescribing anti-people policies saying: “Certainly, in the last four and a half years since I have been managing director of this institution, this is not the recipe we adopted and this is certainly not the feedback I have received from the countries that we have worked with.”
Adesina’s statement quoted Buhari as saying that his administration would also enforce greater discipline, probity and accountability in all revenue generating agencies of the Federal Government.
“We have just come out of budget discussions after many weeks of taking into consideration the many needs of the country, and the downturn of 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,” Adesina quoted Buhari as telling Lagarde.
The president also said the Federal Government was reviewing its operational costs and had directed all the ministries, departments and agencies to cut down on their overhead costs.
Buhari said the Federal Government would welcome the technical support and expertise of the IMF for its plans to diversify the Nigerian economy and further unleash its growth potential.
The TUC statement read in part: “This warning is informed by our bitter past experience with the financial body. Our country is already in dire straits and cannot cope with the IMF’s characteristic shylock conditionalities attached to its credit facilities, and must not accept same if that is what the visit is about.”
While warning against the devaluation of the naira, TUC declared that if such a step was taken, the percentage of devaluation must be equivalent to the percentage increase in the national minimum wage.
TUC asked if Nigeria could not solve its developmental challenges without foreign intervention, saying: “For the umpteenth time, we wonder aloud: Can’t we solve our challenges as a nation without foreign intervention? Must the Bretton Wood institutions be the ones to always determine and tell us when our economy is doing well and when to devalue the naira? Why must they suggest to us how our economy can be fixed, whereas their recipe has consistently tended to end up impoverishing more Nigerians than ever before? Since when did it become rocket science for our once functional refineries to produce at more than 30 per cent of installed capacity and make petroleum products available?”
While tracing the basis for Nigeria’s under-development, TUC explained that the country had stayed glued to its identity as a mono-cultural oil-based economy.

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