Saturday, November 16, 2024 -The International Monetary Fund (IMF) has reported that the economic reforms initiated by Nigeria's federal government have yet to yield significant positive results, 18 months after their implementation. In its latest outlook for sub-Saharan Africa, the IMF excluded Nigeria from the list of countries making reform progress, grouping it among nations struggling to meet desired economic outcomes.
According to the IMF report, the region’s average economic growth rate
is projected to remain at 3.6% for 2024, but Nigeria’s growth rate of 3.19%
falls below this benchmark.
Presenting the report at the Lagos Business School, IMF Deputy Director
Catherine Patillo noted that while macroeconomic imbalances have improved in
some countries, Nigeria was not part of the good news.
“More than two-thirds of countries have undertaken fiscal
consolidation,” Patillo stated. “The median primary balance is expected to
narrow by 0.7 percentage points alone in 2024, and these have included notable
improvements in Côte d’Ivoire, Ghana, and Zambia, among others.”
She further emphasized that inflationary pressures have eased in many
countries across the region. “On the imbalances side, median inflation has
declined in many countries. And it’s already within or below the target band in
about half the countries,” she explained. However, Nigeria's inflation, which
slowed in mid-2024, resumed an upward trend in September and October, currently
standing at 33.8%—far above the 21% target for the year.
The IMF report also flagged Nigeria as one of the countries grappling
with high inflation rates. “Inflation is still in double digits in almost
one-third of countries, including Angola, Ethiopia, and Nigeria, and above
target in almost half of the region, particularly where monetary policy is not
anchored by exchange rate pegs,” Patillo remarked. She also observed that
exchange rate stability had improved in most countries but singled out Nigeria
for ongoing instability. “Foreign exchange pressures have largely abated since
the end of 2023,” she noted, but Nigeria has faced severe exchange rate
instability and local currency depreciation.
The report highlighted the burden of debt servicing on Nigeria’s fiscal
stability. “Debt service capacity remains low by historical standards. In
almost one-quarter of countries, interest payments exceed 20 percent of
revenues, a threshold statistically associated with a high probability of
fiscal stress,” it stated. It added: “In Angola, Ghana, Nigeria, and Zambia,
this increase in interest payments alone absorbed a massive 15 percent of total
revenue.”
Looking to the future, the IMF painted a mixed picture for sub-Saharan
Africa but indicated that Nigeria remains on the downside due to social and
political resistance to reforms. “Resource-intensive countries (RICs) continue
to grow at about half the rate of the rest of the region, with oil exporters
struggling the most,” the report stated. “Political and social pressures are
making it increasingly challenging to implement policy adjustments and
reforms.”
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