IMF Says Worsening Insecurity Threatens Nigeria’s Economic Recovery 

The International Monetary Fund, IMF,  warns that worsening violence and insecurity could derail Nigeria’s recovery from economic recession.

The IMF stated this in a report on its 2021 Article IV Consultation with Nigeria, calling on the Federal Government, to improve transparency of COVID-19 emergency spendings, warning that low vaccination rates exposes Nigeria to future pandemic waves and new variants; However Nigeria is among countries of the world that recorded lowest infection or death rates.

Among other things the IMF reiterated its call for removal of fuel subsidies, accompanied with compensatory measures for the poor and transparent use of saved resources, as well as implementation of major reforms in the fiscal, exchange rate, trade, and governance areas to lift long-term, inclusive growth.

While noting that the Nigeria’s fiscal deficit worsened to 5.9 per cent of Gross Domestic Product, GDP, in 2021, in spite of rise in crude oil price, the IMF said there is need for urgent fiscal consolidation to create policy space and reduce debt sustainability risks.

The IMF said: “Despite the recovery in oil prices, the general government fiscal deficit is projected to widen in 2021 to 5.9 percent of GDP, reflecting implicit fuel subsidies and higher security spending. Moreover, the consolidated government revenue-to-GDP ratio at 7.5 percent remains among the lowest in the world.

“A worsening of violence and insecurity could also derail the recovery. On the upside, the non-oil sector could be stronger, benefitting from its recent growth momentum, supportive credit policies, and higher production from the new Dangote refinery.

“Nigeria’s ratification of the African Continental Free Trade Agreement could also yield a positive boost to the non-oil sector while oil production could rebound, supported by the more generous terms of the Petroleum Industry Act.