The International Monetary Fund, IMF in a press release enjoy the Federal Government to stop fuel subsidy alongside several other reform would salvage the Nigeria economy and reduced the poverty level in the nation.
Considering, the present policies, IMF has declared that its speechless about the success of the reformation. The IMF has called on the Federal Government to create further better policies that would gear and improve the Nigeria economy.
According to a broadcast journal with BBC, Okwoche, Nigeria is fast slipping into economic depression, with an expextation to close 80 out of the 110 embassies in the world, due to the financial burden required to embark on foreign mission across the world.
Here’s the full tweet by him;
#Nigeria is expected to close 80 of its one-hundred-and-ten embassies worldwide as it can't afford to keep them going The latest budget only has enough funds for thirty foreign missions. Some diplomatic officials are unable to pay utility bills, rent or their kid's school fees.
— okwoche (@okwoche) April 4, 2019
The IMF stated: “Executive Directors welcomed Nigeria’s ongoing economic recovery, accompanied by reduced inflation and strengthened reserve buffers. They noted, however, that the medium-term outlook remains muted, with risks tilted to the downside.
In addition, long standing structural and policy challenges need to be tackled more decisively to reduce vulnerabilities, raise per capita growth, and bring down poverty. Directors, therefore, urged the authorities to redouble their reform efforts, and supported their intention to accelerate implementation of their Economic Recovery and Growth Plan.
Continuing, it said: “Bold reform efforts, following the election cycle, could boost confidence and investments, especially given relatively conservative baseline projections.
On the downside, additional delays in reform implementation, a persistent fall in oil prices, reduced oil production, increased security tensions, or tighter global financial market conditions could undermine growth, provoke a market sell-off, and put additional pressure on reserves and/or the exchange rate.”
According to the statement, the IMF also said that despite the decline in Non-Performing Loans (NPLs) and improved prudential banking ratios, “undercapitalized banks continue to weigh on financial sector performance,” adding that the authorities should create a credible timeline to recapitalise weak banks in the country and also for phasing out the Asset Management Corporation of Nigeria(AMCON).
As the statement puts it: “Directors welcomed the decline in non-performing loans and the improved prudential banking ratios, but noted that restructured loans and undercapitalized banks continue to weigh on financial sector performance.
“They suggested strengthening capital buffers and risk-based supervision, conducting an asset quality review, avoiding regulatory forbearance, and revamping the banking resolution framework. Directors also recommended establishing a credible time bound recapitalization plan for weak banks and a timeline for phasing out the state backed asset management company, AMCON.”
Furthermore, the IMF Directors, according to the statement, welcomed the Federal Government’s tax reform plan to increase non-oil revenue, including through tax policy and administration measures. “They stressed the importance of strengthening domestic revenue mobilization, including through additional excises, a comprehensive VAT reform, and elimination of tax incentives.
“Directors highlighted the importance of shifting the expenditure mix toward priority areas. They welcomed, in this context, the significant increase in public investment, but underlined the need for greater investment efficiency,” the statement said.
Similarly, the IMF Directors expressed support for restrictive monetary policy, saying it is appropriate for the Nigerian economy at this time.
“With inflation still above the Central Bank’s target, directors generally considered that a tight monetary policy stance is appropriate,” they stated. They urged the Central Bank of Nigeria (CBN) to enhance transparency and communication and to improve the monetary policy framework, including using more of traditional methods such as raising the Monetary Policy Rate (MPR) or Cash Reserve Requirements (CRR).
They, however, advised the CBN to end its direct intervention in the economy and focus on its price stability mandate.
It would be recalled that during her visit to Nigeria in 2016, the Managing Director of the IMF, Christine Lagarde, had asked the Federal Government to take very tough economic decisions, including removal of fuel subsidy and increasing VAT.
Stressing the need to remove fuel subsidy, Lagarde said at the time that: “The move by the government to remove the fuel subsidy is good. Those people who need the subsidy can receive cash transfer. Fuel subsidies are hard to defend. Subsidies are no longer good. But I hear that it will hurt the poor. Forty per cent of fuel subsidies in rich countries go to rich families. The people do not really need the subsidy. Look at the number of people who stay at stations trying to buy fuel.”
Should Fuel Subsidy be stopped?
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