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IMF speaks on Nigeria’s economy, urges priority policy to tackle food insecurity



The International Monetary Fund (IMF), on Tuesday, released a statement on Nigeria’s economic crisis while suggesting ways the country can come out of its present challenges.

The statement followed a visit to the country by an IMF team led by its Mission Chief for Nigeria, Axel Schimmelpfennig, who visited Lagos and Abuja between February 12 to 23, to hold discussions for the 2024 Article IV Consultations with Nigeria.

During the visit, the team met with Minister of Finance, Wale Edun, Central Bank of Nigeria (CBN) Governor Yomi Cardoso, senior government officials, the Ministry of Agriculture, the Ministry of the Environment, as well as representatives from sub-nationals, the private sector and civil society.

At the end of the visit, the team issued a statement urging Nigeria take urgent steps to address the growing food insecurity in the country which has seen at least almost one in 10 people facing hunger.

The team acknowledged that
Nigeria was implementing a series of economic reforms that have fuelled the cost of living crisis in Africa’s most populous nation occasioned by the “removal of fuel subsidies and liberalization of currency controls.”

The statement issued by Schimmelpfennig noted however, that the reforms have spurred inflation that is accelerating at the fastest pace in nearly three decades.

The IMF statement reads:

“Nigeria’s economic outlook is challenging. Economic growth strengthened in the fourth quarter, with GDP growth reaching 2.8 percent in 2023.

“This falls slightly short of population growth dynamics. Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 percent, although high inflation, naira weakness, and policy tightening will provide headwinds.

READ ALSO:IMF raises alarm on Nigeria’s economic challenges, calls for urgent action

“With about 8 percent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority. In this regard, staff welcomed the authorities’ approval of an effective and well-targeted social protection system.

“The team also welcomed the government’s release of grains, seeds, and fertilizers, as well as Nigeria’s introduction of dry-season farming.

“Recent improvements in revenue collection and oil production are encouraging. Nigeria’s low revenue mobilization constrains the government’s ability to respond to shocks and to promote long-term development.

“Non-oil revenue collection improved by 0.8 percent of GDP in 2023, helped by naira depreciation. Oil production reached 1.65 million barrels per day in January as the result of enhanced security.

“The capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to 3 percent of GDP in 2024.

“The recently approved targeted social safety net program that will provide cash transfers to vulnerable households needs to be fully implemented before the government can address costly, implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected.

“The team welcomed the Monetary Policy Committee (MPC)’s decision to further tighten monetary policy. The MPC increased the policy rate by 400 basis points to 22.75 percent for a total tightening of 1,025 basis points since May 2022.

“This decision should help contain inflation, which reached 29.9 percent year-on-year in January 2024, and pressures on the naira,” it added.

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