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IMF blames Nigeria’s N18trn public debt on policy adjustment delay

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…As CBN disagrees with IMF projections

By Emma Ujah, Abuja Bureau Chief

ABUJA— The International Monetary Fund, IMF, has said Nigeria’s huge  public debt was due to government’s delay in implementing necessary adjustments to fiscal policy.

According to the National Bureau of Statistics, NBS, Nigeria’s public debt rose by 43 per cent to N18 trillion in 2016.

The IMF stated this in its 2017 Sub-Saharan Africa Regional Economic Outlook released, yesterday, noting that insufficient policy adjustment was impeding economic growth in oil exporting countries as Nigeria and Central African nations.

The report stated: “While noting that many countries suffered a very substantial commodity price shock, the report also points to insufficient policy adjustment to account for the broad-based slowdown in growth momentum in the region.

“This is especially the case among commodity exporters, notably oil exporters, such as Angola, Nigeria and the countries of the Central African Economic and Monetary Union (CEMAC).

“According to the report, the delay in implementing critical adjustment policies is leading to higher public debt, creating uncertainty, holding back investment, and risks generating, even deeper difficulties in the future.”

Among other things, the report predicted 2.6 per cent economic growth for Sub-Saharan countries in 2017; 0.8 per cent and 1.9 per cent economic growth for Nigeria this year and 2018 respectively.

IMF urges strong policy decisions

Speaking at the presentation of the report in Abuja, yesterday,  Head of IMF African Region, Mr. Abebe Selassie, urged strong policy decisions by leaders on the continent, with a view to changing the dwindling economic fortunes of the region.

He identified a strong macroeconomic stability, tackling of structural weaknesses; and strengthening of social protection for the vulnerable as three key immediate measures towards a robust economic growth in Africa.

According to the director, who spoke on the theme: “Restarting the Growth Engine,” “Sub-Saharan Africa remains a region with tremendous potential for growth in the medium term, but with limited support expected from external environment, strong and sound domestic policy measures are urgently needed to reap this potential.

“The priority should be to put renewed focus on macroeconomic stability in order to set the stage for a growth turnaround. For the hardest-hit countries, fiscal consolidation remains urgently needed to halt the decline in international reserves and offset budgetary revenue losses.

“In addition, where available, greater exchange rate flexibility and the elimination of exchange restrictions will be important to absorb part of the shock.

“Meanwhile, for countries where growth is still strong, it will be important to address emerging vulnerabilities from a position of strength.

Adjustment policies delays hurting Nigeria, others

While noting that many countries suffered a very substantial commodity price shock, the report also points to insufficient policy adjustment to account for the broad-based slowdown in growth momentum in the region.

According to the report, “the delay in implementing critical adjustment policies is leading to higher public debt, creating uncertainty, holding back investment, and risks generating even deeper difficulties in the future.”

CBN disagrees with IMF projections

Director of Policy of the Central Bank of Nigeria, Mr. Moses Tule, who also made a presentation on the report, said with a well-implemented Economic Recovery and Growth Plan of the Federal Government, the outcome should be different from the IMF forecasts.

His words: “The ERGP was launched recently and we think if well implemented, outcomes will be slightly different from the IMF projections.”

We must stop exporting raw commodities

—Adeosun

In her remarks on the occasion, Minister of Finance, Mrs. Kemi Adeosun, said for Africa to achieve its potentials, the age-long practice of exporting raw commodities must stop.

He words: “The business model of extracting and exporting raw commodities with little nor no value-add cannot continue.

“This old approach must give way to a broad-based growth model driven by import substitution strategies that will localize production, help create jobs and achieve sustainable growth.”

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