BUSINESS Nigeria’s growth insufficient to Nigeria needs cut unemployment, poverty – IMF $550m to acquire 2 new satellites – Minister
The International Monetary Fund (IMF) has said the 0.8 percent growth rate in 2017 is not enough to reduce unemployment and poverty in Nigeria.
This, among other observations, was made by the IMF staff team led by Mr Amine Mati when they visited Nigeria July 20-31, 2017 to discuss recent economic and financial developments, update macroeconomic projections and review reform implementation.
At the end of the visit, Mr. Mati, Senior Resident Representative and Mission Chief for Nigeria at the IMF, further noted: “The economic backdrop remains challenging, despite some signs of relief in the first half of 2017. Economic activity contracted in the first quarter of the year by 0.6 percent, mainly as maintenance stoppages reduced oil production.
“However, following four quarters of negative growth, the non-oil economy grew by 0.6 percent (year-on-year), on the back of a rebound in manufacturing and continued strong performance in agriculture.
“Various indicators suggest an uptick in activity in the second quarter of the year. Helped by favorable base effects, headline inflation decreased to 16.1 percent in June 2017, but remains high despite tight liquidity conditions.”
The group also observed that the preliminary data for the first half of the year indicated significant revenue shortfalls, with the interest-payments to revenue ratio remaining high (40 percent at end-June) and projected to increase further under current policies.
It said, “High domestic bond yields and tight liquidity continue to crowd out private sector credit. Given Nigeria’s low growth environment and the banking system’s exposure to the oil and gas sector, nonperforming loans increased from 6 percent in 2015 to 15 percent in March 2017 (8 percent after excluding the four undercapitalized banks).
“However, near-term vulnerabilities and risks to economic recovery and macroeconomic and financial stability remain elevated. At 0.8 percent, growth in 2017 will not be sufficient to make a dent in reducing unemployment and poverty.
“Concerns about delays in policy implementation, a reversal of favorable external market conditions, possible shortfalls in agricultural and oil production, additional fiscal pressures, continued market segmentation in a foreign exchange market that remains dependent on central bank interventions, and banking system fragilities represent the main risks to the outlook.”
The IMG team noted that “Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent. This includes implementing immediately specific priorities that will help achieve the goals of the ERGP.
“In the near term, a stronger push for front-loaded fiscal consolidation through a sustainable increase in non-oil revenues would be needed to create space for infrastructure spending, social protection, and private sector credit.
“The team held productive discussions with senior government and central bank officials. It also met with members of parliament, representatives of the banking system, private sectors, civil society, and international development partners.”
It thanked the authorities and all those with whom they met for the “productive discussions, excellent cooperation, and warm hospitality.” FLIGHT