The Managing Director International Monetary Fund IMF, Christine Lagarde has advised managers of Nigeria economy to re-examine the nation’s fiscal and monetary policies soon after the February elections. Speaking in Kigali Rwandan capital Lagarde said “Nigeria should re-examine its fiscal and monetary policies immediately after elections to see if further action is needed, after the government took steps to rein in spending and adjusted interest rates in November.
The country has not asked for financial assistance from the IMF, which would be willing to extend further technical support to the country if requested, she said.
“Shortly after the elections the authorities will have to reassess the situation in view of the continued decline of oil prices to see if more needs to be done,” said Lagarde. “They may have to take more measures.”
The IMF last week lowered its 2015 economic-growth outlook for sub-Saharan Africa to 4.9 per cent from a previous estimate of 5.8 per cent in October, citing “shocks” to oil-producing economies from falling prices. The growth forecast for Nigeria, the continent’s largest economy, was lowered to 4.8 per cent from 7.3 per cent.
Nigeria should re-examine its fiscal and monetary policies immediately after elections to see if further action is needed, after the government took steps to rein in spending and adjusted interest rates in November, said Lagarde.
The country hasn’t asked for financial assistance from the IMF, which would be willing to extend further technical support to the country if requested, she said.
“Shortly after the elections the authorities will have to reassess the situation in view of the continued decline of oil prices to see if more needs to be done,” said Lagarde. “They may have to take more measures.”
Lagard further said that African nations should consider cutting fuel subsidies and oil exporters must curb spending as a slump in crude prices takes its toll on government revenue.
An almost 60 percent drop in oil prices since June has forced policy makers in Nigeria, Africa’s biggest crude producer, to devalue the currency, raise interest rates to a record and consider shaving the 2015 budget by 8 per cent.
According to IMF Managing Director subsidizing countries “should think about reducing and phasing out the oil subsidies, taking advantage of the oil price and using public finance more wisely than in undifferentiated energy subsidies,” Lagarde said in an interview in the Rwandan capital, Kigali. “For the exporting countries that are clearly taking a hit on both accounts of reduced trade revenues and reduced public revenues, they have to be very cautious with public spending, and reduce what can be reduced and use whatever is left over as buffers.”
In Angola, Africa’s second-biggest oil producer, the government is seeking to lower subsidies to 1 per cent of gross domestic product from 4.5 per cent. The fiscal cost of fuel subsidies across sub-Saharan Africa amounted to 1.4 percent of the region’s GDP in 2012, according to a report by the IMF.
Negotiations with Ghana over a loan program are continuing in order to resolve “a few issues” before a proposal can be submitted to the IMF board for approval, said Lagarde.
The West African nation is seeking as much as $1 billion in aid from the lender to help ease a crisis sparked by currency depreciation and soaring public debt. The government expects to enter the loan program by the end of February, according to Deputy Finance Minister Cassiel Ato Forson.
The IMF in September said it’s seeking concessions from Ghana that may include cutting its wage bill or eliminating energy and fuel subsidies in return for support to curb the fiscal gap, projected to reach 9.5 percent of GDP last year.
In the Ebola-stricken nations of Liberia, Sierra Leone and Guinea, the IMF will probably propose additional support valued at $130 million, along with considering debt relief through, at least in part, “re-purposed funding,” she said. The viral illness killed at least 8,785 people in the three West African countries since an outbreak began in Guinea in December 2013, according to the Centers for Disease Control and Prevention.
A precautionary credit line for Kenya, East Africa’s largest economy, will probably be concluded by next month, said Lagarde. The IMF said in November it had reached a preliminary agreement with Kenya for a $750-million standby loan to help protect the economy against possible market shocks.
