BUSINESS Nigeria’s growth in­suf­fi­cient to Nigeria needs cut un­em­ploy­ment, poverty – IMF $550m to ac­quire 2 new satel­lites – Min­is­ter

Daily Trust - - NEWS - By Hamisu Muham­mad

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

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