By Omoh Gabriel,
Finance Minister Mrs Esther Nenadi Usman is to press at the ongoing World Bank/IMF meeting in Singapore for an increased Africa voice and representation at the World Financial body. She is billed to present the position of Africa Group 1Ministers of Finance at the meeting. The presentation made are based on issues that were previously discussed in Mupota. In her presentation to the IMFC committee on behalf of the group, she expressed concern that the robustness in global growth has been accompanied by many downside risks. Among the risk she said are intensified inflationary pressure, higher oil prices, global imbalances and cooling of housing markets in a number of industrial countries Besides she said a greater potential for adoption of increased protectionist measures and more trade distortions exist in the wake of the breakdown of the Doha round of trade negotiations. In her presentation she said that the impact of higher global oil prices has been disruptive, but well absorbed by the market partly reflecting the growing global demand for oil, as well as relatively well anchored high oil price and inflationary expectations. This situation she told the IMF Board of Governors is proving more intractable to manage and could be unsustainable in the medium to long term. She told the Board that net oil importing countries especially those in sub sahara Africa are experiencing increasing difficulty in managing balance of payments problem as well as fiscal pressures associated with high oil prices.
She raised the issue of the significant tightening of financial market conditions by developed economies. Of particular concern she said is the fact that they appear to occur partly as a rasult of a rise in inflationary expectations and not merely from a more gradual adjustment in savings and investment behaviour. This action she said could adversely affect emerging economies as it could lead to cost of borrowing in low income countries and dampening effect on investment, growth, poverty reduction and on efforts aimed at meeting the MDGS.
Another of the issue she spoke about is global macro economic stability as it affects the continent, the flow of AID etc. Another presentation made by the Africa group here in Singapore to the IMF is on corruption and good governance. According to her the Africa group on development have taken a critique of the bank saying while on the one hand it lay on due emphasis on good governance from Africa leaders it turn a blind eye to those who steal money from the continent and stow them away in their banks in Europe and America. Africa Finance ministers are thus demanding from the developed countries a war on corruption in such a manner that will make looted money just like laundered money illegal with no hiding place in developed economies as a sign that they are out to fight corruption.
At an earlier preparatory meeting with the IMF Managing Director Mr. De Rato, Friday the minister defended Nigeria position in the world oil market stating that Nigeria has managed well the gains from higher oil prices referred as excess crude revenue. According to her, the IMF boss was concerned about the global effect of higher oil prices on the economies of importing as well as exporting countries. She told reporters in Singapore that rising oil prices has both positive and negative effects on the economy.
Continuing she said that in Nigeria the oil price shocks has resulted in oil wind fall in the form of increased revenue inflow into the coffer of government which the government has managed well through savings of the excess revenue in order to ensure macro economic stability. She said that the deployment of part of the excess revenue from crude oil earnings into the financing of power projects and agriculture were in a bid to ensure proper utilisation of the resources minding the implication of uncontrolled injection of funds into the economy.
Mrs Usman said that the IMF in its to be released evaluation of the Nigeria economic performance through the Policy Support Instrument has commended the federal government over the prudent management of its resources.
She said that the Nigeria Policy Support Instrument, the NEEDS was the first of its kind to be endorsed by the IMF and that it has become a model for other developing countries. It has been exported to other countries she beamed.
She said that the effective management of the excess crude revenue was a challenge to the federal government due to the high expectation of Nigerians who are of the view that since there is more coming in from oil, there should be increased spending by government. She said that if the excess oil revenue is spent the way Nigerians are clamouring for it would lead to inflation and depreciation of the naira as their would be demand pressure on foreign exchange which is capable of eroding the gains so far made through the economic reforms.
Fielding questions from reporters who wanted to know if the focus of Nigeria at the meeting was to explain the position of Nigeria on oil prices, she said that Nigeria’s focus or thrust of presentation was not to explain away the use of the gains from rising oil prices to the international community but to press for a voice and increase representation of Africa at the world financial monitor as Nigeria is in Africa group one countries in the IMF schedule.
Explaining further she said that the federal government has evolved a medium term policy programme that ensures that programmes embarked upon by the government are well coordinated and accommodated between budgets.
The CBN Governor Professor Charles Soludo who was in the company of the minister reechoed reinforced the Minister’s position said further that because of the fiscal discipline of the present government, there has been some measure of macro economic stability which made the IMF to give the Nigeria economy a clean bill.
