If Nigeria must come out of recession and benefit from recent reforms, it must embrace increased structural adjustment, the International Monetary Fund, IMF, has said.
The IMF, at a press conference addressed by the Director of its African Department, Abebe Selassie, in Washington on Friday, called on the federal government to make additional structural adjustment and tighter monetary policy so as to address macroeconomic imbalances in the country.
Selassie, while speaking on measures the federal government needs to take to reduce economic inbalance, said: “Yes there was that adjustment in exchange rate, but despite that the BDC rate was getting much weaker. What is necessary to facilitate the reduction in imbalances in simple terms is significant fiscal adjustment. I think that it is very important. Especially on the revenue side, taking measures to curtail the fiscal deficit will be very important.
“This has to be accompanied by tighter monetary conditions more than we are seeing. I think some of the continued weakness of the naira coming from monetary conditions are not as tight as they could be.
“This has to be accompanied by structural reforms, both fiscal structural issues to try and improve public finance over the medium term but also a lot of the structural reforms that are needed to force a stronger supply response in the country.
“One good thing for Nigeria is that the level of debt is not very high. So there is room to have a more gradual adjustment. But the issue here is to have in place a credible framework that allows private sector and other financier to step in so as to give government the time to smoother the adjustment.”
By Timothy Enietan-Matthews
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