International Monetary Fund predicts Nigeria's economy will grow 0.8% this year

Xavier Trudeau
Août 3, 2017

Though Nigeria expected to witness a slight Economic growth of 0.8 per cent by the end of 2017, it is lesser than projected growth rates in South Africa and Egypt, according to the International Monetary Fund (IMF).

"The economic backdrop remains challenging, despite some signs of relief in the first half of 2017".

The IMF said the government saw significant revenue shortfalls in the first half of the year, with interest-payments remaining as high as 40 percent at end of June.

In a statement released on Wednesday at the end of its July 20 to 31 staff visit to Nigeria, the International Monetary Fund says despite some signs of relief in the first half of this year, the country faces near-term vulnerabilities and risks to economic recovery and financial stability. Various indicators suggest an uptick in activity in the second quarter of the year. Helped by favourable base effects, headline inflation decreased to 16.1 percent in June 2017, but remains high despite tight liquidity conditions.

The federal government had launched the ERGP to drive it economy diversification strategy and pull the economy out of recession. High domestic bond yields and tight liquidity continue to crowd out private sector credit.

Low growth and exposure to the oil sector increased non-performing loans at banks to 15 percent in March from 6 percent in 2015.

"Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent", it said after a team visited Nigeria last month to review reform implementation.

It noted steps taken in implementing the power sector recovery plan, introducing a voluntary income and asset declaration programme and moving forward the 60-day national action plan to improve the business environment.

"However, near-term vulnerabilities and risks to economic recovery and macroeconomic and financial stability remain elevated".

The global agency also predicted the economy will not grow enough to reduce unemployment and poverty.

Such delays, it said also brought additional fiscal pressures, continued market segmentation in a foreign exchange market that has continued to depend on CBN interventions, with banking system fragility representing the main risks to the outlook. This includes implementing immediately specific priorities that will help achieve the goals of the ERGP.

"In the near term, a stronger push for front-loaded fiscal consolidation through a sustainable increase in non-oil revenues would be needed to create space for infrastructure spending, social protection, and private sector credit", it said. It also met with members of parliament, representatives of the banking system, private sectors, civil society, and worldwide development partners.

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