IMF commends Nigeria Government’s management of COVID-19 pandemic

By Matthew Eloyi

The International Monetary Fund (IMF) has commended the Federal Government of Nigeria for its proactive management of the COVID-19 pandemic and its economic impacts.

The commendation is contained in the organisation’s Executive Board’s conclusion of the 2021 Article IV Consultation with Nigeria, obtained from its website on Tuesday.

Despite the pandemic’s management, the outlook, according to the board, is vulnerable to substantial risks, including the pandemic’s trajectory, oil price volatility, and security challenges.

It acknowledged that the Nigerian economy was recovering from a historic downturn, aided by government policies, rising oil prices, and international financial aid.

“After registering a historic deficit in 2020, the current account improved in 2021 and gross foreign exchange reserves have improved, supported by the IMF’s Special Drawing Rights (SDR) allocation and Eurobond placements in September 2021.

“Notwithstanding the authorities’ proactive approach to contain COVID-19 infection rates and fatalities and the recent growth improvement, socio-economic conditions remain a challenge.

“Levels of food insecurity have risen and the poverty rate is estimated to have risen during the pandemic,” it said.

According to the IMF, the prognosis is balanced, with low vaccination rates exposing Nigeria to future pandemic waves and new variations on the one hand, and increasing debt service to government revenues posing fiscal sustainability issues on the other.

It went on to say that escalating violence and insecurity could further sabotage 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 (AfCFTA) 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,” it said.

IMF, however, emphasised the need for major reforms in the fiscal, exchange rate, trade and governance areas to lift long-term, inclusive growth.

On exchange rate, the directors welcomed the removal of the official exchange rate and recommended further measures towards a unified and market-clearing exchange rate.

This, they said, was to help strengthen Nigeria’s external position, taking advantage of the current favorable conditions.