The International Monetary Fund (IMF) has waded into the current naira scarcity in Nigeria by calling on the Federal Government and the Central Bank of Nigeria (CBN), to extend the cash swap policy deadline beyond February 10.
The international monetary institution which is the first global body to openly call for an extension of the cash swap policy, made the call shortly after the Supreme Court gave a ruling temporarily restraining the FG and the CBN from enforcing the deadline.
In a statement in Abuja on Wednesday issued by Laraba Bonet, on behalf of IMF’s Nigerian resident representative, Ari Aisen, the IMF said it hinged its plea on the hardship Nigerians were going through.
“In light of hardships caused by disruptions to trade and payments due to the shortage of new bank notes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline should problems persist in the next few days leading up to the February 10, 2023, deadline,” part of the statement said
The International Monetary Fund expects economic growth in Spain to slow in 2023 on higher prices and flagging demand before rebounding to pre-pandemic levels in 2024, it said on Wednesday in its country report.
Growth is expected to be weak in the coming quarters reflecting a plunge in consumer confidence due to a cost-of-living crisis and weak demand, the IMF said in its report. Activity will accelerate towards the end of the year, helped by European Union recovery fund spending and improved supply, it said.
“We do not forecast a technical recession, but growth will be close to 0% in the last quarter of this year and the first quarter of 2023,” Dora Iakova, IMF mission chief for Spain, said in a call with journalists.
Although the IMF warned of many downside risks, notably from the impact of energy prices, it expects gross domestic product to grow 4.6% in 2022, up from its previous forecast of 4.3% in October, and slow to 1.2% in 2023, above the average of euro zone countries.
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The improvement is attributed to the robust labor market and to an especially strong performance by tourism and other services.
The country’s headline and core inflation are likely to remain above the European Central Bank’s 2% target until 2024, while its industrial output is projected to reach pre-pandemic levels by early 2024, the IMF added in the report.
Iakova said headline and core inflation will converge in 2023 at around 4.5%.
While the report welcomed the rapid rollout of government support to mitigate the impact of rising prices, it regrets that the measures are not targeted and have led to market distortions.
“Most of the fiscal support has gone to measures that are untargeted and distort price signals, such as electricity tax reductions and fuel rebates. The latter have been fiscally costly, with benefits accruing disproportionately to higher-income households,” the IMF said in the report.
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Carlo Ancelotti’s team successfully added to their four cups from 2014 to 2018, and their triumph meant European teams have won the past 10 editions of the tournament.
Bitcoin is not a cure-all for Africa’s economic woes, the International Monetary Fund warned Thursday, after the Central African Republic adopted the cryptocurrency as legal tender.
The head of the IMF’s African department, Abebe Aemro Selassie, said that a “robust” payment system with financial transparency and a governance framework must be in place when adopting cryptocurrencies.
“It is really important to not see such things as a panacea” for the challenges that countries face, he said.
The Central African Republic has become the second country in the world to adopt bitcoin as official currency after El Salvador, which did so last year.
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The CAR is one of the planet’s poorest and most troubled nations, locked in a nine-year-old civil conflict and with an economy heavily dependent on mineral extraction, much of which is informal.
It is among six central African countries that share the CFA franc — a regional currency that is backed by France and pegged to the euro.
The office of CAR President Faustin Archange Touadera said Wednesday that lawmakers passed bitcoin legislation and that he had signed it into law.
Touadera’s chief of staff, Obed Namsio, said Wednesday that the move “places the Central African Republic on the map of the world’s boldest and most visionary countries.”
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The IMF had heavily criticised El Salvador’s adoption of the cryptocurrency last year, warning of “large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection”.
Other countries have already initiated legislative processes to adopt bitcoin, according to the specialised site Coinmarketcap.com.
Bitcoin’s value has swung wildly, soaring by 150 percent last year to reach a record $68,991 before falling sharply in recent months. It was worth almost $40,000 on Thursday
The International Monetary Fund (IMF) on Tuesday sharply downgraded the outlook for the world economy this year, citing Russia’s war in Ukraine and warned that inflation was now a “clear and present danger” for many countries.
The 190-country lender blamed Moscow’s invasion for disrupting global commerce, pushing up oil prices, threatening food supplies and increasing uncertainty already heightened by the coronavirus and its variants.
The war is expected to further increase inflation, the IMF said in its latest World Economic Outlook, warning that a further tightening of Western sanctions on Russia to target energy exports would cause another major drop in global output.
The IMF cut its forecast for global growth to 3.6% this year, a steep falloff from 6.1% last year and from the 4.4% growth it had expected for 2022 back in January.
It also said it expects the world economy to grow 3.6% again next year, slightly slower than the 3.8% forecast in January.
Medium-term global growth is expected to decline to about 3.3% over the medium-term, compared to an average of 4.1% in the period from 2004 to 2013 and a growth of 6.1% in 2021.
War impacts The war – and the darkening outlook – came just as the global economy shook off the impact of the highly infectious omicron variant.
“What has Russia’s invasion of Ukraine cost? A crisis on top of a crisis, with devastating human costs and a massive setback for the global economy,” IMF Managing Director Kristalina Georgieva told a food security panel on Tuesday.
The IMF has estimated that Ukraine’s GDP will collapse by 35% this year, while Russia’s output will shrink by 8.5%, while emerging and developing Europe, including both countries, will contract by 2.9%.
But IMF chief economist Pierre-Olivier Gourinchas told a news briefing that a tightening of sanctions against Russia to include restrictions on energy exports could double Russia’s GDP declined to 17% by 2023.
The IMF said other risks to the outlook include a sharper-than-expected deceleration in China prompted by a flare-up of COVID-19 lockdowns.
Rising prices for food, energy and other goods could trigger social unrest, particularly in vulnerable developing countries, the IMF said.
‘Seismic waves’ “The war will slow economic growth and increase inflation,” Gourinchas told reporters on Tuesday.
“The war adds to the series of supply shocks that have struck the global economy in recent years. Like seismic waves, its effects will propagate far and wide – through commodity markets, trade, and financial linkages,” Gourinchas said.
U.S. economic growth is expected to drop to 3.7% this year from 5.7% in 2021, the fastest growth since 1984.
The new forecast marks a downgrade from the 4% the IMF had predicted at the beginning of the year.
Hobbling U.S. growth this year will be Federal Reserve (Fed) interest rate increases meant to combat resurgent inflation and an economic slowdown in key American trading partners.
Europe, heavily dependent on Russian energy, will bear the brunt of the economic fallout from the Russia-Ukraine war.
For the 19 countries that share the euro currency, the IMF forecasts collective growth of 2.8% in 2022, down sharply from the 3.9% expected in January and from 5.3% last year.
The IMF expects the growth of the Chinese economy, the world’s second-biggest, to decelerate to 4.4% this year from 8.1% in 2021.
Beijing’s zero-COVID-19 strategy has meant draconian lockdowns in bustling commercial cities like Shanghai and Shenzhen.
Some commodity-exporting countries benefiting from the rising price of raw materials will likely defy the trend toward slower growth.
For example, the IMF raised its growth forecast for oil producer Nigeria – to 3.4% this year from the 2.7% the fund said it expected back in January.
The world economy had bounced back with surprising strength from 2020’s brief but brutal coronavirus recession. But the rebound presented problems of its own: Caught by surprise, businesses scrambled to meet a surge in customer orders, which overwhelmed factories, ports and freight yards. The result: long shipping delays and higher prices.
The IMF forecasts a 5.7% jump in consumer prices in the world’s advanced economies this year, the most since 1984. In the United States, inflation is running at a four-decade high.
Central banks are raising interest rates to counter rising prices, a move that could choke off economic growth.
By driving up prices of oil, natural gas and other commodities, the Russia-Ukraine war has made their task of fighting inflation while preserving the economic recovery even trickier.
The conflict also has “triggered the biggest refugee crisis in Europe since World War II,” the IMF noted, and cut supplies and raised prices of fertilizer and grain produced in Russia and Ukraine, threatening food security in Africa and in the Middle East.
In a speech last week, IMF’s Georgieva warned of the threat of “more hunger, more poverty and more social unrest.”
The IMF emphasized the uncertainty surrounding its forecasts and the difficulty governments and central banks face in trying to adjust to rapidly changing circumstances.
“The war may get worse. The sanctions may tighten up. COVID may roam again around the world,” Georgieva said on Tuesday. “For policymakers – a tough time.”
The IMF will send staff to Lebanon and Tunisia this month to further discussions on new financial aid programs for the countries, a fund spokesman said Thursday.
The governments have been seeking support for their troubled economies for months but have yet to reach an agreement with the Washington-based crisis lender.
Talks with Lebanon on aid to address the severe financial challenges are “progressing well,” IMF spokesman Gerry Rice told reporters.
But “extensive work is needed, he said. “Lebanon’s challenges are deep and complex they will require time and commitment.”
In 2020, Lebanon defaulted on its sovereign debt for the first time in its history.
The IMF launched negotiations last month on a program to help pull the Middle Eastern country out of its economic crisis, which has seen the currency collapse, inflation hit triple-digit levels and poverty climb.
Rice said fund staff will also meet again this month with Tunisian authorities and seek to build on the “good progress that has been made in understanding their reform policies.”
The North African nation in mid-November requested an IMF loan program for an economy plagued by low growth as well as high public debt, inflation and unemployment.
President Kais Saied sacked the government and suspended parliament on July 25 last year, and the requested IMF bailout would be the fourth since Tunisia’s revolution
The European Union is preparing to impose a series of tougher sanctions against Russia over its invasion of Ukraine, the head of the European Commission said Friday.
“We will deny Russia the status of most-favored-nation in our markets. This will revoke important benefits that Russia enjoys as a WTO (World Trade Organization) member,” said Ursula von der Leyen.
Saying Russian companies will no longer have a privileged position in the EU, von der Leyen vowed, “We will ensure that Russia cannot obtain financing, loans or any other benefits from these institutions.”
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She also said they are working so that the “Russian state and its elites cannot use crypto assets to circumvent the sanctions.”
The EU, she added, will ban the exports of any EU luxury goods from countries of the bloc to Russia, saying, “Those who sustain Putin’s war machine should no longer be able to enjoy their lavish lifestyle while bombs fall on innocent people in Ukraine.”
On Wednesday, the EU agreed to a new round of sanctions targeting senior Russian officials and oligarchs in retaliation for Moscow’s military operation in neighboring Ukraine.
At least 564 civilians have been killed and 957 others injured in Ukraine since the beginning of the war on Feb. 24, the United Nations has said, while also cautioning that conditions on the ground make it difficult to verify the true number.
Over 2.5 million people have fled to neighboring countries, with about 2 million more estimated to be displaced inside Ukraine, according to the U.N. refugee agency.
Russia’s invasion of Ukraine will have significant economic repercussions, impacting the global economic recovery, the leaders of the World Bank and IMF warned on Thursday, signaling that they were ready to help Ukraine.
IMF Managing Director Kristalina Georgieva said she was “deeply concerned” about the fighting’s impact on the people of Ukraine, and cautioned in a tweet that the conflict “adds significant economic risk for the region and the world.”
The International Monetary Fund continues to assess the economic impact, but will “stand ready to support our members as needed,” she said.
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The Washington-based crisis lender is in the process of deploying $2.2 billion in assistance to Ukraine under a loan program set to end in June.
Georgieva has said the fund could provide aid to other countries impacted by any spillover effects of the conflict, if needed.
On Twitter, World Bank President David Malpass said he was “deeply saddened and horrified by the devastating developments in Ukraine, which will have far-reaching economic and social impacts.”
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He added that the Washington-based development lender “is preparing options for large support to the people of Ukraine and the region, including immediate budget support.”
The snowballing conflict already has sent oil prices soaring to their highest level since 2014, adding to worrying global inflation pressures.
In January, the IMF cut its world GDP forecast for 2022 to 4.4%, half a point lower than its previous estimate in October, due to “impediments” caused by the latest coronavirus outbreak.
U.S. President Joe Biden on Thursday announced severe new sanctions on Moscow, including freezing assets of major banks and cutting off high-tech exports to the country, in coordination with Europe.
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However, analysts note that Moscow has prepared for years to withstand such sanctions, building up a war chest of cash and gold, and has very low debt.
“It’s not a coincidence. I think it’s a very much part of what we call fortress Russia strategy,” said Elina Ribakova of the Institute of International Finance, a global banking association.
“It was a very deliberate shift in macroeconomic policy to accommodate geopolitical ambitions,” she told Agence France-Presse (AFP). “They have a piggy bank that can protect them.”
The conflict could also change the Federal Reserve’s calculus when it comes to fighting inflation in the United States, a central bank official said Thursday.
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The Fed next month is expected to hike rates for the first time since COVID-19 broke out, but it might have to move more aggressively if the Ukraine crisis disrupts commodities and raises prices.
Loretta Mester, president of the Cleveland Federal Reserve Bank, said the U.S. central bank will monitor the conflict’s impact on the world’s largest economy.
“The implications of the unfolding situation in Ukraine for the medium-run economic outlook in the U.S. will also be a consideration in determining the appropriate pace at which to remove accommodation,” she said in a speech.
In a separate research note, the IMF called for countries to work together to finish the pandemic off.
The global economy faces a hard road back from the Covid-19 downturn, and nations should remove trade barriers on medical technologies to aid the recovery, the IMF chief said on Thursday.
The call from Managing Director Kristalina Georgieva ahead of this week’s G20 leaders summit comes as countries grapple with the fallout from a pandemic that has killed hundreds of thousands and caused a sharp contraction in growth.
“While a medical solution to the crisis is now in sight, the economic path ahead remains difficult and prone to setbacks,” Georgieva said in a blog post.
Major pharmaceutical companies are now closing in on vaccines against the virus, amid a global spike in cases that has caused some countries to reimpose restrictions to curb transmission.
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“The resurgence in infections is a powerful reminder that a sustainable economic recovery cannot be achieved anywhere unless we defeat the pandemic everywhere,” Georgieva said.
She called for countries to cooperate to ensure an adequate supply of vaccines, tests and medicines, as well as “multilateral efforts on the manufacturing, purchase and distribution of these health solutions — especially in poorer nations.
It also means removing recent trade restrictions on all medical goods and services, including those related to vaccines,” Georgieva said.
– Last summit – The Covid-19 pandemic has caused more than 1.3 million deaths worldwide, according to an AFP tally, and wreaked a grievous toll on the global economy.
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The IMF expects global growth to contract by 4.4 percent this year before rebounding 5.2 percent in 2021. However, Georgieva noted third-quarter growth was better than expected in the United States, Japan and European countries.
The virtual summit hosted by Saudi Arabia is set to be the last during the term of US President Donald Trump, who lost his bid for another four years in office earlier this month, though he has rejected the results.
Under his leadership, Washington has engaged in trade conflicts with strategic rival China as well as its European allies, which slowed down global growth even before the virus’s arrival.
“Combining well-coordinated national policies with joint measures at the global level will help ensure a strong, sustainable recovery,” the Washington-based crisis lender said.
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“In the immediate term, the G20 should refrain from imposing or intensifying trade restrictions and promptly remove those put in place since the start of the year on all medical goods and services as well as on any goods and services related to vaccine manufacturing and distribution.”
The IMF called for Britain and the European Union to conclude a trade deal that would forestall new trade barriers as London disentangles itself from the regional bloc.
The lender also reiterated its call for more public spending to help countries escape the growth slowdown and reshape their economies for both growth and to fight climate change.
The International Monetary Fund on Monday said it had approved $4.3 billion in aid to South Africa to help it fight the coronavirus pandemic.
“The IMF approved $4.3 billion in emergency financial assistance under the Rapid Financing Instrument (RFI) to support the authorities’ efforts in addressing the challenging health situation and severe economic impact of the COVID-19 shock,” the Washington-based crisis lender said in a statement.
South Africa is the continent’s most-industrialized economy and has the largest number COVID-19 cases, with more than 445,000 detected and 6,769 deaths as of Monday, according to the Africa Centres for Disease Control and Prevention.
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South African Finance Minister Tito Mboweni in June predicted the economy would shrink 7.2 percent in 2020, its deepest slump in 90 years, and compared the ballooning public debt to a “hippopotamus… eating our children’s inheritance.”
The South African treasury said the IMF money would go towards stabilizing the debt, creating jobs, helping frontline health workers fighting COVID-19 and reforming the economy to spur growth.
“Going forward, our fiscal measures will build on our policy strengths and limit the existing economic vulnerabilities which have been exacerbated by the COVID-19 pandemic,” Mboweni said in a statement.
The money from the IMF is the latest disbursement under the RFI, which allows nations to circumvent the lengthy negotiations usually needed to secure a full economic assistance program — time most countries do not have as they struggle to cope with the coronavirus crisis.
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IMF deputy managing director Geoffrey Okamoto said “a deep economic recession is unfolding,” exacerbated by South Africa’s slow rates of growth, high unemployment and widening inequality.
In this file photo an exterior view of the building of the International Monetary Fund (IMF), with the IMG logo, is seen on March 27, 2020 in Washington, DC. Olivier DOULIERY / AFP
The RFI money will help address the country’s balance of payment needs “that emerged as a result of the pandemic and thus contain the economic disruption and its regional spillovers.”
The money will specifically address “the fiscal pressures posed by the pandemic, limit regional spillovers and catalyze additional financing from other international financial institutions,” the IMF said.
The IMF board on Friday approved a one-year, $5.2 billion financing package for Egypt to help the country alleviate the economic impact of the COVID-19 pandemic.
The new funding under a standby arrangement comes on top of $2.8 billion in emergency aid the IMF board approved a month ago, although at the time officials acknowledged that more help would be needed.
The IMF noted Cairo had “a strong track record” of implementing economic reforms under fund-supported programs over the past four years, and the new loan will help put it on strong footing for recovery.
“Egypt was one of the fastest-growing emerging markets prior to the COVID-19 outbreak,” the IMF said in a statement. “However, the significant domestic and global disruptions from the pandemic have worsened the economic outlook and reshuffled policy priorities.”
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The aid will focus first on health and social spending, as well as financial stability to keep a lid on inflation.
Fund staff agreed with authorities on the terms of the loan in early June, and said the funds also will open the doors to financing from other lenders and help support job creation by the private sector.
Egypt has suffered over 2,500 COVID-19 fatalities with over 61,000 cases, according to Johns Hopkins University’s tally.
Nigerians will pay much higher tariff for power in 2021, going by promises made by the Federal Government to the International Monetary Fund while seeking the $3.4bn emergency financial assistance recently approved for Nigeria.
The Executive Board of the IMF approved the Rapid Financing Instrument, which the Federal Government plans to use to address the economic impact of the COVID-19 pandemic in the country, on April 28.
A Letter of Intent, jointly signed by the Finance Minister, Zainab Ahmed, and the Governor of Central Bank of Nigeria, Godwin Emefiele, and addressed to the IMF Managing Director, Kristalina Georgieva, indicated that the Federal Government made a number of promises to the fund in order to secure the financial assistance.
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One of the promises, or commitments, which the government made in a bid to assure the executive board of the IMF of its readiness to reposition the Nigerian economy after the pandemic, is that Nigerians would pay full cost-reflective tariff for power in 2021.
The Federal Government also told the IMF it intends to cap electricity tariff shortfalls to N380bn in 2020.
“We are also advancing in our power sector reforms – with technical assistance and financial support from the World Bank – including through capping electricity tariff shortfalls this year to N380bn and moving to full cost-reflective tariffs in 2021,” the Federal Government said in the letter.
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On January 4, the Nigerian Electricity Regulatory Commission approved an increase in electricity tariff for the 11 electricity distribution companies in Nigeria.
It, however, could not implement the tariff increase after labour unions, lawmakers and other Nigerians kicked against the move, which would have commenced on April 1, 2020.
Although the NERC-reviewed tariff was not cost-reflective enough as required by power distributors, it showed that Nigerians would definitely pay more for electricity if it had been implemented.
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This, therefore, implies that once the government enforces the payment of full cost-reflective tariff, in line with the promise to the IMF, power users might pay far higher than what was projected in NERC’s recent tariff review.
The commission had explained that its directive on the January 2020 tariff regime for different Discos superseded the earlier one issued on the subject matter.
According to details of the review published by the commission in January, for the Abuja Electricity Distribution Company, residential customers in R3 category who were paying N27.20 per unit would have been paying N47.09, had the regime started on April 1, 2020.
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The customers would have paid N19.89 more per unit.
The NERC review also showed that for Ikeja Electricity Distribution Company, customers on the R3 category who were paying N26.50 per unit would have paid N36.92 per unit from April 1.
The new rate amounted to an additional N10.02 per unit.
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In the same vein, going by the NERC’s stalled tariff plan, Enugu Electricity Distribution Company residential (R3) customers who were paying N27.11 per unit in 2015 would have paid N48.12 per unit from April 1, 2020.
The new rates were, however, put on hold after customers kicked vehemently against the development.
But going by the Federal Government’s promise to the IMF, an implementation of cost-reflective tariffs in 2021 means that Nigerians would pay even much higher for power than the rates which NERC had planned to charge from April 1.
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Also, in the Letter of Intent, which was dated April 21, the Federal Government also hinted at further increment in Value Added Tax as part of plan to increase its revenue to 15 per cent of Gross Domestic Product.
The planned revenue drive also includes hike of excise fees and removal of tax exemptions.
“First and foremost, we will revert to our government’s planned medium-term fiscal consolidation path – which includes increasing revenue to 15 per cent of GDP through further VAT reforms, rise in excises, and removal of tax exemptions – once the crisis passes,” the letter said.
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The Federal Government also assured the IMF that it was working to reduce its budget deficit to under three per cent of GDP in line with the Fiscal Responsibility Act.
The Federal Government also assured the fund that it was committed to eliminating recourse to central bank financing of budget deficits by 2025.
The International Monetary Fund (IMF), on Tuesday, approved US$3.4 billion emergency financial assistance for Nigeria to fight coronavirus.
The Executive Board approved Nigeria’s request under the Rapid Financing Instrument (RFI).
The IMF explained that the near-term economic impact of COVID-19 is expected to be severe, while already high downside risks have increased.
It noted that even before the COVID-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita GDP levels.
The world body added that the pandemic – along with the sharp fall in oil prices – has magnified the vulnerabilities, leading to a historic decline in growth and large financing needs.
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The IMF said it remains closely engaged with the Nigerian authorities and stands ready to provide policy advice and further support, as needed.
Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, in a statement said: “The COVID-19 outbreak – magnified by the sharp fall in international oil prices and reduced global demand for oil products – is severely impacting economic activity in Nigeria.
“These shocks have created large external and financing needs for 2020. Additional declines in oil prices and more protracted containment measures would seriously affect the real and financial sectors and strain the country’s financing.
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“The authorities’ immediate actions to respond to the crisis are welcome. The short-term focus on fiscal accommodation would allow for higher health spending and help alleviate the impact of the crisis on households and businesses. Steps taken toward a more unified and flexible exchange rate are also important and unification of the exchange rate should be expedited.
“Once the COVID-19 crisis passes, the focus should remain on medium-term macroeconomic stability, with revenue-based fiscal consolidation essential to keep Nigeria’s debt sustainable and create fiscal space for priority spending. Implementation of the reform priorities under the Economic Recovery and Growth Plan, particularly on power and governance, remains crucial to boost growth over the medium term.”
As the COVID-19 pandemic continues to inflict high and rising human costs worldwide, the International Monetary Fund (IMF) has projected a contraction in the global economy by -3 per cent this year.
The cumulative loss to global GDP over 2020 and 2021 from the crisis could be around $9 trillion, greater than the economies of Japan and Germany combined.
For the sub-Saharan African region, the IMF, in its latest World Economic Outlook report, projected a contraction of -1.6 per cent, with Nigeria topping the chart with a negative growth of -3.4 per cent, indicating a looming recession for a country that is just recovering from one.
Indeed, the negative growth is hinged on plummeting oil prices and food inflation, even as the latest report deviates from the IMF’s earlier projection of 2.5 per cent growth for 2020 and 2021.
Finance Minister Zainab Ahmed had warned that Nigeria could fall into its second recession in five years if drastic actions were not taken to cushion the economic blow. She estimated this week that the economy could shrink as much as 3.4 per cent this year without a massive stimulus plan that includes billions in Central Bank, Federal Government and international support.
The warning came as the IMF began considering Nigeria’s emergency request for $3.4 billion in funding and the World Bank, from which the country has sought up to $2.5 billion, released $82 million to strengthen the country’s healthcare infrastructure.
According to the IMF, effective policies are essential to forestall outcomes which may be much worse than during the 2008-09 financial crisis, even though Nigeria might be repeating the 2016 recession chronicles, having failed to do anything different in terms of diversification and building buffers for moments like this.
If necessary measures to reduce the contagion and protect lives are taken, the IMF noted that a short-term toll on economic activity is expected and would aid the country’s recovery by 2.5 per cent in 2021. It said that in a baseline scenario (assuming that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound), the global economy is projected to grow by 5.8 per cent in 2021 as economic activity normalizes, helped by policy support.
Already, President Muhammadu Buhari, on Monday, while extending the lockdown, directed the Ministers of Industry, Trade and Investment, Communication and Digital Economy, Science and Technology, Transportation, Aviation, Interior, Health, Works and Housing, Labour and Employment and Education to jointly develop a comprehensive policy for a “Nigerian economy functioning with COVID-19.”
The IMF said: “The risks for even more severe outcomes, however, are substantial. Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health.
“Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.
“And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channelling aid to countries with weak health care systems.
“Economic policies will also need to cushion the impact of the decline in activity on people, firms, and the financial system; reduce persistent scarring effects from the unavoidable severe slowdown, and ensure that the economic recovery can begin quickly once the pandemic fades.”
On its part, the Lagos Chamber of Commerce and Industry (LCCI) stated that now is the time for economic managers to set an agenda for the nation’s post-pandemic economy.
“Businesses have been grounded by the lockdown; supply chains disrupted, and aggregate demand depressed. Investment assumptions have collapsed across sectors. Businesses are faced with a force majeure and the shocks are profound and unprecedented. The mortality of SMEs is set to heighten as they have the tenuous capacity to absorb shocks, especially of a scale that we are currently witnessing,” it said.
According to the chamber’s Director-General, Dr Muda Yusuf, through digital platforms have become more vibrant, they are not enough to generate the desired momentum of economic activities, as interactions and connectivity among economic agents are at the lowest ebb.
To save the economy from collapse, the LCCI urged the salvaging of investments across all levels – micro, small, medium and large enterprises.
“Without investment, we cannot have jobs; aggregate demand would remain weak; government revenue would be in jeopardy as tax revenue plummets, and economic sustainability will be at risk. This underscores the imperative of an urgent rescue package for business, to enable investors to ride out the storms,” it added.
Some of the proposed measures include tax breaks and concessions for investors, fiscal policy palliatives for the real sector, commercial banks loan facilities, aviation sector palliatives and deregulation of the downstream sector.
Team Lead, Centre for Social Justice (CSJ) and Developmental Law expert, Eze Onyekpere, advocated full deregulation of the downstream sector as well as the patronage of locally produced goods.
According to him, the current situation offers the Federal Government an opportunity to implement certain reforms like the passage of the Petroleum Industry Bill.
On his part, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Timothy Olawale, said in the short term, Nigeria needs greater fiscal space to boost the health infrastructure in order to contain the spread of COVID-19, support the sectors mostly hit and stimulate domestic consumption, while the Central Bank should cut interest rates and channel liquidity to firms and households.
“There is a need to provide a series of economic policy options to target households and businesses. With the current challenges in generating revenue to sustaining the national budget, due to the drop in the price of crude oil globally, we believe that the Federal Ministry of Finance should push better for debt relief as part of the measure to get the economy back to business as usual as soon as possible.
“Key sectors that would be most affected, like hospitality, tourism, aviation, entertainment should be provided specific stimulus packages to bounce back from the rubble, to guarantee the functioning of the essential sectors.
“For workers who lost their jobs as a result of the pandemic, Federal Government should provide emergency income grant as palliative”, he added.
IMF Managing Director, Kristalina Georgieva, on Friday, named a former Nigerian finance minister, Dr. Ngozi Okonjo-Iweala, among a group of prominent individuals appointed to serve as her new External Advisory Group.A statement posted on the IMF website said the group, comprising individuals with high-level policy, market, and private sector experience, would provide insights to enhance the Fund’s ability to serve its membership.
Other members of the group are Mr. Tharman Shanmugaratnam, Senior Minister of Singapore and Chairman of the Monetary Authority of Singapore; Ms. Kristin Forbes, Professor, Massachusetts Institute of Technology, and Mr. Kevin Rudd, former Prime Minister of Australia.Also in the team are Lord Mark Malloch Brown, former United Nations Deputy Secretary-General; Mr. Feike Sijbesima, Honorary Chair, DSM; Former CEO, Royal DSM, Mr. Raghuram Rajan, Professor, University of Chicago, and Ms. Ana Botín, Group Executive Chairman, Santander.
The group also include Ms. Carmen Reinhart, Professor, Harvard University; Mr. Mohamed A. El-Erian, Chief Economic Adviser, Allianz; Mr. Scott Minerd, Chief Investment Officer, Guggenheim Investments, and Ms. Nyaradzayi Gumbonzvanda, Chair of ActionAid International.The group is expected to provide perspectives from around the globe on key developments and policy issues, including policy responses to the exceptional challenges the world now faces due to COVID-19 and its economic impact.
Announcing the establishment of the group, Georgieva said, “Even before the spread of COVID-19 and the dramatic health, economic, and financial disruptions it has brought, IMF members confronted a rapidly evolving world and complex policy issues.“To serve our membership well in this context, we need top-notch input and expertise from the widest range of sources, inside and outside the Fund.
“Toward this end, I am proud that an exceptional and diverse group of eminent individuals with high-level policy, market, and private sector experience has agreed to serve on my External Advisory Group.
“Today we had a dynamic discussion to gain their insights, and to receive informal reactions to our ideas and approaches.”The External Advisory Group will meet a few times a year with the IMF’s Managing Director, Deputy Managing Directors, and a sub-set of IMF department Directors.
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