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… Team arrives next week to assess 2016 budget
From Juliana Taiwo-Obalonye, Abuja
Managing Director of the International Monetary Fund (IMF), Christine Lagarde, has said Nigeria does not need any loan from the institution given the determination and resilience so far of President Muhammadu Buhari and his team in turning the economy around.
Ladarge assured also that she is not in the country to negotiate loans with conditionalities.
The IMF boss stressed that although Nigeria does not need an IMF loan, fiscal discipline is needed for Nigeria’s sustainability.
Lagarde, on a four-day visit to Nigeria, made this disclosure to State House correspondents shortly after a closed-door meeting with Buhari, his deputy, Yemi Osinbajo, and some key ministers inside the Presidential Villa, Abuja, yesterday.
Others who attended the meeting included the Minister of Finance, Kemi Adeosun; Minister of Budget and National Planning, Udo Udoma; Minister of Transportation, Rotimi Amaechi; and Minister of Works, Housing and Power, Babatunde Fashola, among others.
Lagarde said: “Let me make it clear that I am not here (in Nigeria) nor is my team in this country to negotiate a loan with conditionality.
“We are not into programme negotiations and frankly at this point in time, given the determination and 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.”
The IMF boss said her organisation believes that with clear primary ambition to support poor Nigerians, there could be added flexibility in the monetary policy, particularly if oil price slumps for longer period as expected.
She said the organisation’s position was that Nigeria should not deplete its reserves simply because of rules that will be exceedingly rigid.
While saying that she was not suggesting that rigidity be totally eliminated, Lagarde argued that some degree of flexibility would be enough.
She noted that since her last visit to Nigeria four years ago, the country had witnessed a number of changes in the areas of democracy and economy, noting that Nigeria had become the largest economy in Africa, the most populated and with a very attractive market.
The IMF boss, however, regretted that things have changed in a more complicated way with the drop in oil price, which has affected the country’s revenue, reducing it by half.
Also speaking on her meeting with Buhari, Lagarde described the discussions as excellent, adding that they discussed challenges ahead stemming from oil price reduction. She said the meeting stressed the necessity to apply fiscal discipline and the need to, also, respond to population needs while addressing medium term specificities of improving the competitiveness of Nigeria and yet also focusing on the short-term fiscal situation.
This, she explained, requires that revenue sources be identified in order to compensate the shortfall resulting from oil price decline.
She disclosed that as customary, a team of IMF economic experts would arrive the country next week to assess the 2016 budget.
She said: “Oil is not the major contributor to the Nigerian GDP; it is only about 40 per cent, but it is a big source of revenue for the government.
“We discussed with the president, vice president and the minister of Finance and minister of Budget how more efficiency, more transparency, better accountability, the enlarging the base of revenue could actually contribute to sound budget going forward.
“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 which is to review and have good discussion with partners, IMF on one hand, country’s authorities on the other hand.
“This is to really assess whether financing is in place, whether the debt is sustainable, whether the borrowing costs are sensible and what strategy to put in place in order to address challenges going forward.”
Lagarde disclosed that she told the president and his team that his fight and determination to fight corruption and bring about transparency and accountability at all levels of the economy are very important agenda item and very ambitious goal that needed to be deliberated upon.
The IMF boss said Buhari himself indicated that he was committed to the anti-corruption war and he will inspire his team members.
She said she would have more discussions with the minister of Finance and the Governor of the Central Bank of Nigeria, Godwin Emefiele.
On fears that IMF’s policies are not pro-people and poor, Lagarde described it as an outdated idea of the organisation.
She explained, “Certainly, in the last four-and-a half years since I have been the managing director of this institution, this is not the recipe we adopted and this is certainly not the feedback I have received from the countries that we have worked with…
“We have discussed that with the minister of Finance together with their team and we would be happy to provide more technical assistance and capacity building. You need a strong tax department, you need a strong debt management, and you need a strong custom authority to achieve a strong economy for the country.”
Lagarde identified the third activity to include lending, which IMF provides because nobody else is ready to provide lending to countries.
“When the balance is in a very bad situation and when there are no finances available, at that point in time, in order to pull the country out of the difficult situation it is in, we come in and we lend.
“But we do that because it is the entire international community’s money. It is not my money, it is the international community’s money and we do so with the right guarantees stepping into international community bonds, which is that the economy is going to be improved, that fiscal discipline is going to be brought in, that corruption is going to be punished. We don’t do as much now as we did four years ago because the situation has improved. As I said earlier on, I am not here to negotiate a programme at all,” she said.
Lagarde, who arrived the Presidential Villa at about 10.55am met the president in a closed-door with session for over an hour before addressing journalists.
Shortly after the press briefing, she also proceeded to the Vice President’s Wing of the Presidential Villa for another round of meeting with Osinbajo who supervises the nation’s economy.
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