Nigeria -- Concluding Statement, IMF Staff Visit To Review Staff Monitored Program
March 6, 2002
IMF Staff Visit To Review Staff Monitored Program
March 6, 2002
Following the expiration of the Stand-By Arrangement in October 2001, the International Monetary Fund (IMF) and the Nigerian authorities have been working closely together on an informal framework for monitoring economic policies. It was expected that successful implementation of economic policies could lead to a medium-term economic program that would foster growth, reduce poverty, and keep inflation low. As part of this informal monitoring process, an IMF staff mission has been in Nigeria since February 25 to review recent economic developments as well as to assess the economic outlook for 2002.
Some progress has been made in the last few months in reducing inflation. However, key targets relating to the implementation of macroeconomic policies were missed. First, the level of government spending could well exceed the government's resources, thereby generating inflation and hurting the poor. Further, given the current environment, there appear to be risks that government spending in 2002 could be very high. This could compromise the quality of government spending, reducing the social benefits. In light of these risks, the IMF staff mission agreed that it would be prudent for the government to avoid committing to policies that could prove difficult to fully implement. This has led to the discontinuation of the informal monitoring of the present set of economic policies.
The staff mission supports the government's resolve to devise a home-grown program, taking account of Nigerian realities. It also welcomes its invitation for the IMF's technical expertise in developing such a program after the budget for 2002 is finalized. The IMF would urge that any such program be strong and designed to help achieve Nigeria's social and economic objectives that the IMF fully shares.