IMF drops suggestions for Nigeria’s currency recovery

FOR close to a year, Nigeria’s economy has endured some of its most severe setbacks in history. This is the outcome of a couple of economic policies implemented by the country’s new administration, including the elimination of gasoline subsidies and the floating of the naira.

Since the introduction of these measures, Nigeria’s currency has been under enormous stress.

While the Nigerian currency was reported as the best-performing currency in the world, earlier in April, in February it was the worst-performing currency in the world, trading as high as N1 900 per US$.

Today it is officially trading at N1148,49/ US$, gaining over N700 since its all-time high, with experts predicting that it could soon go lower than N1 000/US$.

However, the International Monetary Fund has disclosed that this could be a pipe dream if Nigeria does not take on a fundamental approach to rejuvenating its economy. The IMF warned that the country’s economy could be at risk if it simply fails to produce.

The director of the African Department International Monetary Fund, Abebe Aemro Selassie was asked about what he could recommend for the Nigerian economy as it relates to the naira being in free fall.

He responded; “I think Nigeria first and foremost needs to diversify its economy. Second, this also applies to the resources that the government relies on, which is, too much excessively on oil and not enough on non-oil revenue.

“For a country like Nigeria, Africa's most populous country with all of those development spending needs, we think it is problematic that tax revenue to GDP is only 8-9 percent when it should be a lot higher so that more resources can be spent on building universities, on building infrastructure.”

“First and foremost, this is for the people of Nigeria, the government of Nigeria, to choose. We have provided advice in terms of what the ideal mix of policies would be. And just to be clear, we have many reports on this,” Selassie stated.

He however, noted that the government is currently taking the right approach, one which had been suggested by the international lender prior, “on the monetary and exchange rate area, it is also, we think, important to have a system that is broadly reflective of supply and demand conditions,