Nigeria needs to deepen its drive in subsidy reforms and improve tax administration to achieve its development need, the International Monetary Fund (IMF) has said.
The IMF executive board handed down this advice to the Nigerian government at its 2011’s Article IV consultation with Nigeria held on February 22, 2012.
A public information notice issued by the IMF yesterday detailed a list of what it said were its conclusions on the Nigerian economy based on its assessment.
The fund said it supported the (Nigerian) authorities’ strategy to rebuild fiscal buffers through a better prioritization of public expenditure, continued subsidy reform, and improved tax administration,” and that “efforts in these areas will also provide the necessary resources for targeted social programmes and needed infrastructure.”
However, it called for further devaluation of the naira for price stability. “Greater exchange rate flexibility will also facilitate the pursuit of price stability,” it said and that the fund “supported the central bank’s focus on strengthening supervision and the regulatory framework, including addressing the remaining deficiencies in the Anti-Money laundering/Combating the Financing of Terrorism regime.
It voiced support for the establishment of the Sovereign Wealth Fund (SWF) to manage oil earnings just as it recommended that spending from the SWF’s infrastructure fund be integrated into the budget and medium-term expenditure plans.
The IMF said the medium term growth outlook of Nigeria “remains favourable, although subject to external downside risks” while emphasizing the ‘continued need for policies to safeguard stability, diversify the economy and make growth more inclusive.”
The fund said it “welcomed the (Nigerian) authorities’ initiatives to improve the business climate and reform sectors with high employment potential, particularly agriculture” and “encouraged the authorities to persevere with planned reforms in the energy sector under appropriate social safeguards.”