Nigeria: 2013 Article IV Consultation-Staff Report; Press Release and Statement by the Executive Director for Nigeria

Publication Date: April 22, 2014
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Summary: KEY ISSUES Context. Despite recent strong non-oil growth, poverty and income inequality remain high and social and governance indicators are below averages for sub-Saharan Africa. Structural reforms under the Transformation Agenda are ongoing, but significant infrastructure gaps and weak institutional capacity still retard growth prospects. At the same time, vulnerabilities are rising in the buildup to general elections in 2015 and fiscal buffers have been reduced. Meanwhile, GDP is being rebased and structural shifts may suggest a refocus in some policy areas. Outlook and Risks. Growth is expected to remain strong, driven by agriculture, trade, and services. Inflation should continue to decline, in line with a tight monetary policy, and a lowering trend in food prices from higher rice and wheat production. Key downside risks are (i) persistently lower oil revenue from changing global dynamics and lower domestic production; (ii) less prudent fiscal policy through the ongoing political cycle; (iii) ongoing security problems in the North; (iv) uncertainty about the pace of global recovery; and (v) capital flow reversals from the expected unwinding of unconventional monetary policy (UMP) in the advanced economies or increased domestic political risk. Addressing oil theft/production losses. Transparency and governance in the oil sector should be enhanced, including by strengthening the regulatory framework through the passage of a sound Petroleum Industry Bill (PIB) featuring stringent enforcement clauses. A multicountry partner strategy could also improve oil sector oversight. Rebuilding fiscal buffers by insulating macrofinancial stability from the political cycle. The fiscal framework should continue to be improved, with an appropriately conservative 2014 budget. Monetary policy should remain supportively tight, given the potential for capital flow reversals and fiscal slippages. In the event of persistent pressures, the naira should be allowed to adjust and reserve adequacy maintained. Improving competitiveness and productivity to generate inclusive growth will require wide-ranging structural reforms. Three key areas could help promote inclusive growth—increasing the delivery of power, broadening the agricultural production base, and increasing access to finance for SMEs. Support for sectoral growth should be underpinned by improvements in competitiveness rather than by protectionist measures.
Series: Country Report No. 14/103
Subject(s): Article IV consultation reports | Economic growth | Agricultural sector | Fiscal policy | Oil sector | Spillovers | Global competitiveness | Fiscal reforms | Monetary policy | Economic indicators | Debt sustainability analysis | Staff Reports | Press releases | Nigeria

Publication Date: April 22, 2014
ISBN/ISSN: 9781484357903/1934-7685 Format: Paper
Stock No: 1NGAEA2014001 Pages: 103
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