- Buhari: We’ll look inwards to sustain economy
- Beware of visit, TUC warns
Managing Director of the International Monetary Fund, IMF, Ms. Christine Lagarde, Tuesday, said Nigeria does not need loans to survive despite its current economic travails brought about by dwindling price of crude oil at the international market. She also added that the body has no intention of negotiating any new loan programme with Nigeria.
Ms Largade however called for flexibility in the country’s monetary policy in the face of the current economic situation.
The IMF boss equally cautioned that the government should not be rigid in its policy so as not to further impoverish the common man in the country.
“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.
“So of course discipline is going to be needed, of course, 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.
Ms. Lagarde also endorsed Nigeria’s efforts to tackle corruption, while stressing the need for the country to reduce its reliance on oil, sharp falls in the price of which have crippled the economy.
Speaking after holding talks with President Muhammadu Buhari, the IMF boss called for greater flexibility in the country’s exchange rate regime.
This position has fuelled speculation in some quarters that a devaluation of the naira may be imminent.
However, the Minister of Finance, Mrs. Kemi Adeosunm dismissed insinuation that the Fund’s boss is in Abuja to detect how Nigeria should run its economy, pointing out that all meetings held were fruitful and on advisory terms on how the economy can be piloted out of the turbulent waters.
The Central Bank of Nigeria, CBN, has resisted calls by investors to devalue the naira, which has been allowed to fall about 20 percent since the start of 2014.
Measures imposed by the CBN to restrict access to foreign exchange have been backed by the Buhari administration, but they have proved to be unpopular with investors and highlighted Nigeria’s dependence on crude oil exports, which account for more than half of state revenues.
The IMF head, who said she was not in Nigeria to negotiate a loan, backed what she called Buhari’s “very important” fight against corruption and said the president’s reform push could have a positive impact across West Africa.
“His determination to bring about transparency and accountability at all levels of the economy were very important agenda items,” Lagarde told reporters at the presidential villa in Abuja.
Lagarde, who said a team of IMF economists would visit Nigeria next week to assess whether the country’s borrowing costs were sustainable, told reporters she and Buhari discussed the challenges posed by the falling oil price and the need for fiscal discipline.
“The short-term fiscal situation… requires that revenue sources be identified in order to compensate the shortfall resulting from the oil price decline,” the IMF boss added.
“Clearly the authorities should not deplete the reserves of the country simply because of rules that would be exceedingly rigid,” she said.
The CBN spent billions of dollars last year defending the naira, failing to halt its slide against the dollar as plunging oil prices weighed on the currency and the broader economy.
Earlier, President Buhari had told the officials of the International Monetary Fund, IMF, that the country would look inwards and enforce regulations to stop financial leakages.
The President also said his administration will adopt global best practices in generating more revenue to mitigate the effect of dwindling oil prices on the Nigerian economy.
Buhari said that his administration will 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 down turn 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,” Buhari told Ms Lagarde.
He added that the Federal Government was reviewing its operational costs and had directed all the Ministries, Departments and Agencies to cut down on their overhead costs.
He added that his government will welcome the technical support and expertise of the IMF for its plans to diversify the Nigerian economy and further unleash its growth potentials.
Head of Africa research for Standard Chartered bank, Razia Khan said Lagarde’s comments on the naira regime echoed remarks by Buhari last month, and market players were now anticipating a change, potentially at the bank’s next monetary policy committee meeting.
A research note from brokerage Exotix predicted a devaluation of the naira by around 25 percent was imminent.
The IMF Managing Director arrived Nigeria on Monday, January 4, 2016, to begin a four-day visit.
While in Abuja, Ms. Lagarde is also expected to meet with principal officers of the National Assembly, business leaders, prominent women, and representatives of civil society.
A statement issued by the IMF said the visit to Nigeria would provide an opportunity to strengthen the Fund’s partnership with the largest economy in sub-Saharan Africa.
The statement quoted Ms. Lagarde as saying she looked forward to productive meetings with President Buhari and his colleagues as they address important economic challenges, most importantly the impact of low oil prices.
Continuing, the statement further quoted the IMF Boss as saying: “Nigeria is working hard to improve its business environment, promote opportunities for growth in the private sector, and strengthen social cohesion, all areas where the government has an important role to play”.
Buhari was elected in March after campaigning on a promise to clamp down on the endemic corruption that has left many in Africa’s biggest economy mired in poverty despite its enormous energy wealth.
In December, he announced a record budget of N6.08 trillion for 2016, forecasting doubling the deficit to N2.2 trillion ($11 billion) and tripling of capital expenditure intended to help the country adjust to the downturn in oil, which has lost around two-thirds of its value since mid-2014.
Beware of IMF –TUC warns
Meanwhile, the Trade Union Congress, TUC has strongly advised the Federal Government to beware of the International Monetary Fund, IMF and its antics to always use its policies, programmes and predictions to enslave countries, particularly the developing nations.
TUC, in a statement issued yesterday said that the warning is informed by the bitter experiences with the financial body in the past, expressing fear that the world financial institution would repeat such experiences if allowed by Nigerian government.
“Our country is already in dire state 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,” the Congress declared.
The statement jointly signed by TUC President and General Secretary, Comrades Bobboi Kaigama and Musa Lawal, respectively stressed that their position is in view of media reports of Monday’s arrival at Abuja of Managing Director of the Fund, Ms Christine Lagarde, for a four-day working visit during which she is scheduled to meet President Muhammadu Buhari to discuss some of the challenges facing the nation’s economy.
The Congress challenged the government to fashion ways to solve the challenges facing Nigeria, without necessarily seeking or relying on foreign intervention.
“For the umpteenth time, we wonder aloud: Can’t we solve our challenges as a nation without foreign intervention? Must the Brettonwood 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? Why has it become so difficult to produce good and quality rice and other local products for domestic and export needs? Since when did it become rocket science for our once functional refineries to produce at more than 30 percent of installed capacity and make petroleum products available?”
The labour leaders cited instances of India, China, Malaysia, South Africa, and Indonesia who were hitherto nowhere in terms of development in the 1970s/80s but have successfully transformed into giants and premium net exporters of goods and services simply by looking inward to develop their potentials.
The congress further expressed fear that IMF Chief’s visit is a mere courtesy call.
“True to the traditions of her organisation, she would definitely look to dabble and meddle in our fiscal and monetary challenges, and seek to sell our government to another of their portage of self-serving, ill-adaptable theories and policies that are sure to further impact negatively on the country’s revenue and increase the pressure on the naira in the foreign exchange market.