IMF attributes Nigeria’s economic recovery to govt policy support

International Monetary Fund (IMF) says the Nigerian economy is recovering from a historic downturn benefitting from government policy support, rising oil prices and international financial assistance.

IMF disclosed this in a statement issued from its headquarters in Washington D.C. on Monday.

The organisation said Nigeria exited the recession in fourth quarter 2020 and output rose by 4.1 per cent (year-on-year) in the third quarter, with broad based growth except for the oil sector, which is facing security and technical challenges.

Despite the recovery in oil prices, the general government fiscal deficit is projected to widen in 2021 to 5.9 per cent of Gross Domestic Product (GDP), reflecting implicit fuel subsidies and higher security spending, according to IMF.

Moreover, it stated that the consolidated government revenue-to-GDP ratio at 7.5 per cent remained among the lowest in the world.

The international body, however, said that the outlook faced balanced risks, saying that on the downside, low vaccination rates expose Nigeria to future pandemic waves and new variants, including the ongoing Omicron variant.

It stated that higher debt service to government revenues (through higher U.S. interest rates and/or increase borrowing) poses risks for fiscal sustainability.

According to the statement, under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year.

A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies

On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

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