By Babajide Okeowo
The International Monetary Fund (IMF) mission to Nigeria has disclosed that if the country is to address the recurrent Balance of Payment (BOP) pressures and raise the medium-term growth path, there is an urgent need to embrace the broad market and exchange rate reforms.
This was contained in a statement issued by Ms. Jesmin Rahman, in Washington D.C at the conclusion of the virtual mission, which had been conducted from October 30 to November 17, in preparation for the 2020 Article IV Consultation with Nigeria.
Ms. Rahman disclosed that low crude oil prices this year, due to the covid-19 pandemic, had negatively affected Balance Of Payments (BOP) pressures, citing the lockdown measures which caused economic hardships in Nigeria.
“More needs to be done. Major policy adjustments embracing broad market and exchange rate reforms are needed to address recurrent BOP pressures and raise the medium-term growth path.
A durable solution to Nigeria’s recurrent BOP problems requires recalibrating exchange rate policies to reduce its risks, instill market confidence, and facilitate private sector planning.
The adjustments in the official exchange rate made earlier this year are steps in the right direction and the mission recommended a multi-step transition to a more unified exchange rate regime, with a market-based, flexible exchange rate,” Rahman said.
She added that revenue mobilization through improved tax and administrative governance would be required to improve the Nigerian government’s revenues and reduce fiscal risks
“The mission also welcomed fiscal transparency measures introduced to facilitate tracking and reporting of budget emergency funding.
The mission also welcomed the recent submission of the Petroleum Industry Bill (PIB) to the Parliament.
The Fiscal Framework chapter of the bill appropriately rebalances the government takes in onshore and offshore production, with the aim of providing a fair share to the government while remaining attractive to investors,” she added.