IMF CEO Visit: We’re Looking Inwards To Fix Economy – Buhari | Independent Newspapers Limited
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IMF CEO Visit: We’re Looking Inwards To Fix Economy – Buhari

Posted: Jan 6, 2016 at 9:53 am   /   by   /   comments (0)

*IMF economic team due in Nigeria next week, says Lagarde

Those who thought the Managing Director of the International Monetary Fund (IMF), Ms. Christine Lagarde, is in Nigeria to negotiate loans for the country got it all wrong.

The IMF chief said her visit to Nigeria has nothing to do with loans’ negotiation for the Federal Government.

Ms. Lagarde, who arrived in the country on Monday for a four-day visit, made the clarification while speaking with State House reporters after holding a closed-door parley with President Muhammadu Buhari at the Presidential Villa, Abuja.

According to her, the visit is to review the Nigeria economy and its impact on neighbouring countries. Such review, she explained, is one of the three major functions of the IMF.

Her words: “First, let me make it clear that I’m not here, nor is my team in this country, to negotiate a loan with conditionalities. 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.

“Of course, discipline is going to be needed. So, 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.

“On the current account upfront, we believe that with very clear primary ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if, as we think, the price of oil is likely to be possibly low for longer, because clearly the authorities should not deplete the reserves of the country, simply because of rules that will be exceedingly rigid. I’m not suggesting that rigidity be totally removed but some degree of flexibility will be enough.”

Ms. Lagarde also debunked beliefs in some quarters that IMF’s policies are not pro-people and against the poor.

She said: “Certainly, the last four and a half years, since I have been Managing

Director of this institution, this is not the recipes we adopted and this is certainly not the feedback I have received from the countries that we have worked with.

“I just want to point out that we are majorly involved in three kinds of activities. The first one, which is the most traditional one, is under which we give policy advice to our members. We have currently 188 countries that are under this institution and it is our duty and accountability to them to review their economy every year to give them report about their economy. We don’t push them. We don’t do things necessarily to please them. We say things as we see them.

“The second activity which is the fastest growing one in the institution is technical assistance and capacity building, and there is plenty of that available to all the countries of the world. It gives us pride to see that about 150 countries have had the benefit of technical assistance and capacity building.

“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 in order to achieve a strong economy for the country.

“The third activity is the lending that we provide because nobody else is ready to provide lending for the country. 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 very difficult situation it is in, we come in and we lend.

“But, we do that because it is the entire international community’s monies. 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.

According to her, a team of economists are expected in Nigeria next week towards addressing the challenges as a way forward for the country.

The IMF Chief, who said her last visit to Nigeria was four years ago, noted that many things have changed in a more complicated ways.

She said that her meeting with the President centred on the challenges stemming from the falling crude oil prices in the international market and other challenges.

Ms. Lagarde said: “Our technical discussions will continue and to those of you who wonder why the IMF Director is visiting Nigeria. It is precisely to have

good discussion about these new objectives; these reforms agendas that have been identified and supported by the President and also to appreciate the impact that it will have on neighbouring countries because anything that a country as large as Nigeria decides and any hardship it faces would have consequences around it and that is what our research and analytical work is demonstrating. Nigeria is one of those that have impact, not just on itself and its people, but around it and its neighbours.

“I was in Nigeria four years ago and in four years, many things have changed. That has been the topic of our discussions with President Buhari and his team. Looking back four years ago, massive democratic change has occurred in this country peacefully.

“Nigeria has become the largest economy in Africa, certainly the most populated and with a very attractive market. But, things have changed in a more complicated way in the sense that the source of revenue to the government of Nigeria, which was predominantly oil, has seen its price dwindled by more than half and the financing cost around are beginning to rise if only because the economic situation in the United States (U.S.) has improved and interest rates will begin to rise.

“We have excellent discussions with Buhari and we discussed the challenges ahead, stemming from oil price reduction. The necessity to apply fiscal discipline and the need to also respond to the population needs while addressing the medium-term specificities of improving the competitiveness of Nigeria and yet also focusing on the short-term fiscal situation which requires that revenue sources be identified in order to compensate the shortfall resulting from oil price decline.”

Noting that oil is not the major contributor to Nigeria’s Gross Domestic Product (GDP), she said that it is only about 40 per cent, which is a big source of revenue for the government.

The IMF chief added: “We discussed with the President, Vice President and the Minister of Finance and Minister of Budget how more efficiency, more transparency, better accountability, enlargement of the revenue base could actually contribute to sound budget.

“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 to really access whether financing is in place, whether the debt is sustainable; whether the borrowing cost are sensible and what strategy put in place in order to address challenges going forward.”

Ms. Lagarde said that President Buhari’s fight and determination to fight corruption and to bring about transparency and accountability at all levels of the economy are very important and very ambitious goal that needed to be deliberated upon.

According to her, she will hold further discussions during her parley with the Finance Minister, Mrs Kemi Adeosun and Central Bank of Nigeria (CBN) Governor Godwin Emefuele.

She said: “We’ll be discussing issue of fiscal discipline, financing monetary policies and the degree of flexibility, with the fact that Nigeria, with a vibrant large economy, still has to deal with poor people, a lot of inequality and those two components should certainly be the drivers of reforms; whether it is looking at subsidies and how they are structured and how they can be phased out; whether it is monetary policy and the flexibility needed and knowing what effect it has on the poor, all of those are ambitions that we could quickly recognise and support.”

Those at the meeting with the President are: Vice President Yemi Osinbajo, Mrs. Adeosun, Budget & National Planning Minister Udoma Udo Udoma and Transportation Minister Rotimi Amaechi among others.

We’re looking inward to tackle our economic challenges, says Buhari

President Muhammadu Buhari yesterday spoke on how his administration plans to get the economy back on track.

He listed looking inward, enforcement of regulations to stop financial leakages and the adoption of global best practices in generating more revenue to mitigate the biting effects of tumbling oil prices at the international market as some of the measures.

The President dropped the hints while hosting the Managing Director of the International Monetary Fund (IMF), Ms Christine Lagarde, at the Presidential Villa in Abuja.

In a statement by the Special Adviser on Media and Publicity, Mr. Femi Adesina, President Buahari said that his administration will also enforce greater discipline, probity and accountability in all revenue generating agencies.

The statement quoted him as saying: “We have just come out of budget discussions after many weeks of taking into consideration the many needs of the country, and the downturn of the economy with falling oil prices and the negative economic forecasts.

“We are working very hard and with the budget as our way forward. We will do our best to ensure that our country survives the current economic downturn.

“We have also told all heads of Ministries, Departments and Agencies (MDAs) of government that on our watch, they will fully account for all funds that get into their coffers,” President Buhari told Ms Lagarde.

The President said that the Federal Government was reviewing its operational costs and had directed all the Ministries, Departments and Agencies to cut down on their overhead costs.

He said that the Federal Government will welcome the technical support and expertise of the IMF for its plans to diversify the local economy and further unleash its growth potentials.

In her remarks, Ms Lagarde said that the IMF will be willing to assist the Federal Government in plugging revenue leakages, tracing stolen funds and restructuring its tax system.

She said that the country had all the potentials to overcome the current economic challenge of falling commodity prices without resorting to the IMF for financial support.