Nigeria’s medium-term economic outlook remains fragile, with downside risks, the International Monetary (IMF) has said, urging the government to redouble its efforts to raise per capita growth and reduce poverty.
Officials of the fund said during a visit to the country that the government should lower the ratio of interest payments to revenue by consolidating its income and make room for priority expenditure.
“A large infrastructure gap, low revenue mobilisation, governance and institutional weaknesses, continued foreign exchange restrictions, and banking sector vulnerabilities are dampening long-term foreign and domestic investment and keeping the economy reliant on volatile oil prices and production.
“We urge the authorities to reinvigorate implementation of structural reforms to diversify the economy and achieve the Sustainable Development Goals.”
It said the country should improve its business environment, implementing the power sector recovery programme, deepening financial inclusion, reforming the health and education sectors, and implementing policies to reduce gender inequities.
The fund warned Nigeria against persisting structural and policy challenges, which continue to constrain growth to levels below those needed to reduce vulnerabilities, lessen poverty and improve weak human development outcomes, such as in health and education.
The fund officials urged the country to eliminate tax incentives and reform Value Added Tax (VAT) as part of efforts to stimulate economic growth.
The fund reiterated its stance on the need to eliminate foreign exchange restrictions and multiple currency practices, which it said would remove distortions and facilitate economic diversification.
The officials lauded the central bank’s tight monetary policy stance, saying the policy remains appropriate but want the authorities to enhance transparency, communication and improve the monetary policy framework.
However, the IMF team wants the monetary authority to end its direct intervention in the economy and focus on price stability mandate.
