FOLLOWING the slump in crude oil prices, the International Monetary Fund (IMF) has called for more flexibility in the monetary policies of Nigeria because of the adverse effect of rigid policies on the poor.
But the international financial organisation has also advised that there must be fiscal discipline and transparency in the application of the nation’s resources so that they would not be depleted with falling oil prices. Managing Director of the IMF, Christine Lagarde, who met with President Muhammadu Buhari at the Presidential Villa, Abuja, on Tuesday, made the assertions at a press briefing after the meeting.
She also praised the determination of President Buhari to fight corruption and bring transparency to all levels of government. She said the IMF was not in the country to negotiate a loan agreement with the authorities or impose conditionalities but revealed that a team of economists from the Fund would be arriving the country next week to assess the 2016 budget.
She said: “First, let me make it clear that I’m not here nor is my team in this country to negotiate a loan with conditionalities. We are not into programme negotiations and frankly at this point in time, given the determination, resilience displayed by the president and his team, I don’t see why an IMF programme will be needed. “So, of course, discipline is going to be needed.
Of course, implementation is going to be key for the objectives and the ambitions to serve the country well, in order for it to be actually sustainable. “On the current account upfront, we believe that with very clear primary ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if, as we think, the price of oil is likely to be possibly low for longer, because clearly, the authorities should not deplete the reserves of the country simply because of rules that will be exceedingly rigid.
“I am not suggesting that the rigidity be totally removed but some degree of flexility will be enough.” Flanked by the Minister of Finance, Kemi Adeosun and IMF Director of African Development, Antoinette Sayeh, the IMF chief recalled that since first coming to Nigeria four years ago, things had changed a lot including the dramatic fall revenue due to oil price crash.
She said she discussed with President Buhari, the challenges facing the country due to dwindling oil revenue and how to improve the country’s competitiveness. Lagarde said she was not in the country to approve or comment on the 2016 budget but added that the IMF would send its team of economists to do an assessment. “It is not for me here and now to actually approve or comment on the budget because we have procedures in the IMF under which a team of economists is going to come next week actually to do what we call the Article 4,” she said.
She stated that the team would discuss with government authorities “to really assess whether financing is in place, whether the debt is sustainable, whether the borrowing cost are sensible and what strategy put in place in order to address challenges going forward.”