{
  "title": "Public Information Notice: IMF Executive Board Concludes 2010 Article IV Consultation with Nigeria",
  "publication": "IMF News, February 17, 2011",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1125",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1125",
  "overlayPath": "/en/news/articles/2015/09/28/04/53/pn1125/index.md",
  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2011-02-17",
  "sections": [
    {
      "heading": "Background",
      "content": "- Nigeria weathered the global economic recession and a domestic banking crisis \"reasonably well.\"\n- Economic growth:\n  - First half of 2010: remained above 7½ percent.\n  - Expected for whole year 2010: about 8½ percent (recovery in oil production and continued strong growth in other sectors).\n- Inflation: \"stuck in the low double digits for the past two years.\"\n- Foreign reserves: have been falling as the Central Bank of Nigeria (CBN) focused on maintaining exchange rate stability and low interest rates.\n- Fiscal policy in 2010:\n  - Consolidated public spending increased by 37 percent in 2010 (after rising by 10 percent in 2009).\n  - Non-oil primary deficit increased by 5 percentage points to 32 percent of non-oil GDP.\n  - Despite world oil prices well in excess of the budget benchmark price, the government spent all current oil revenues and drew on savings in the Excess Crude Account.\n- Monetary policy actions:\n  - CBN reduced the rate on its standing deposit facility despite high inflation.\n  - In response to pressure on the currency, the CBN sold reserves rather than raise interest rates or let the exchange rate depreciate.\n  - The CBN recently raised interest rates, but short-term real interest rates remain negative."
    },
    {
      "heading": "Economic Outlook and Risks",
      "content": "- Projections:\n  - Nigeria’s economy projected to grow by 7 percent in 2011, moderating gradually in subsequent years.\n  - Inflation projected to decline to 9 percent by the end of 2011.\n- Upside risks:\n  - Shift in government spending towards capital formation.\n  - Planned reforms in the power sector.\n  - Passage of the Petroleum Industry Bill could unlock additional investments in the oil sector.\n- Downside risks:\n  - Greater risk of lower rather than higher oil production.\n  - Inflation risk hinges on the 2011 budget; a more expansionary budget passed by the National Assembly could undermine the CBN’s ability to deliver on inflation.\n  - Speculation against the naira could intensify should reserves continue to fall."
    },
    {
      "heading": "Executive Board Assessment and Policy Recommendations",
      "content": "- General assessment:\n  - Strong external position and low debt helped mitigate the impact of the global financial crisis.\n  - Pro-cyclical fiscal stance and accommodative monetary policy resulted in high inflation and a loss in international reserves.\n- Fiscal policy:\n  - Directors supported planned fiscal consolidation to rebuild fiscal space and contain price pressures.\n  - Welcomed efforts to strengthen nonoil revenues and the draft budget for 2011 aiming to reverse the expansion in real public spending in 2010.\n  - Saw need for a strong oil-revenue rule to prevent policy pro-cyclicality.\n  - Welcomed the authorities’ intention to establish sovereign wealth funds under the Nigerian Sovereign Investment Authority (NSIA) to shield the budget from oil-revenue volatility and enhance management of oil wealth.\n  - Encouraged channeling NSIA-financed infrastructure expenditures through the budget to safeguard the stabilization function of the NSIA and the quality of public investment.\n- Monetary and exchange rate policy:\n  - Considered the central bank’s recent increase in policy rates appropriate; further tightening may be needed should inflation pressures continue.\n  - Took note of staff’s assessment of an overvaluation of the naira; stressed that greater exchange rate flexibility would prevent one-way bets in the foreign exchange market and cushion external shocks.\n  - Expressed concerns about potentially conflicting objectives of monetary policy; advised that the policy framework should focus more clearly on price stability.\n  - Generally agreed that moving gradually toward an inflation-targeting regime, once necessary institutional underpinnings are in place, would help anchor inflation expectations.\n- Central bank activities and financial sector:\n  - Generally supported scaling back the central bank’s development finance initiatives as soon as feasible while protecting the central bank’s balance sheet and pursuing reforms to deepen capital markets.\n  - Commended authorities for actions to stabilize the financial sector.\n  - Welcomed establishment of an asset management corporation to clean up bank balance sheets and encouraged maintaining full transparency in bank resolution."
    },
    {
      "heading": "Selected Economic and Financial Indicators, 2007–10 (key statistics)",
      "content": "- Real GDP (at 1990 factor cost, annual percentage change): 2007: 6.4; 2008: 6.0; 2009: 7.0; 2010 Est.: 8.4\n- Oil and Gas GDP (annual percentage change): 2007: -4.5; 2008: -6.2; 2009: 0.5; 2010 Est.: 11.1\n- Non-oil GDP (annual percentage change): 2007: 9.5; 2008: 9.0; 2009: 8.3; 2010 Est.: 7.9\n- Production of crude oil (million barrels per day): 2007: 2.21; 2008: 2.09; 2009: 2.16; 2010 Est.: 2.36\n- Nominal GDP at market prices (trillions of naira): 2007: 20.9; 2008: 24.6; 2009: 25.1; 2010 Est.: 32.3\n- Nominal non-oil GDP at factor cost (trillions of naira): 2007: 13.1; 2008: 15.2; 2009: 17.4; 2010 Est.: 21.4\n- Nominal GDP per capita (US$): 2007: 1,153; 2008: 1,401; 2009: 1,112; 2010 Est.: 1,387\n- Consumer price index (annual average): 2007: 5.4; 2008: 11.6; 2009: 12.5; 2010 Est.: 13.8\n- Consumer price index (end of period): 2007: 6.6; 2008: 15.1; 2009: 13.9; 2010 Est.: 12.8\n- Consolidated government operations (percent of GDP):\n  - Total revenues and grants: 2007: 28.4; 2008: 32.8; 2009: 19.9; 2010 Est.: 25.5\n  - Of which: oil and gas revenue: 2007: 21.9; 2008: 26.6; 2009: 13.0; 2010 Est.: 19.0\n  - Total expenditure and net lending: 2007: 28.7; 2008: 28.2; 2009: 30.4; 2010 Est.: (not specified)\n  - Overall balance: 2007: -0.4; 2008: 4.6; 2009: -10.4; 2010 Est.: -6.9\n  - Non-oil primary balance (percent of non-oil GDP): 2007: -29.1; 2008: -28.4; 2009: -27.3; 2010 Est.: -32.2\n- Excess Crude Account / Sovereign Wealth Fund (US$ billions): 2007: 14.2; 2008: 19.7; 2009: 7.1; 2010 Est.: 3.4\n- Money and credit (Change in percent of broad money at the beginning of the period):\n  - Broad money: 2007: 44.2; 2008: 57.8; 2009: 17.5; 2010 Est.: 12.1\n  - Net foreign assets: 2007: 23.5; 2008: 23.3; 2009: -10.9; 2010 Est.: -12.0\n  - Net domestic assets: 2007: 20.8; 2008: 34.5; 2009: 24.1; 2010 Est.: (not specified)\n  - Credit to consolidated government: 2007: -10.5; 2008: -11.7; 2009: 10.5; 2010 Est.: 18.1\n  - Credit to the rest of the economy: 2007: 59.6; 2008: 50.6; 2009: 21.7; 2010 Est.: 3.3\n- Current account balance (percent of GDP) (percentage change, unless otherwise specified): 2007: 18.7; 2008: 15.7; 2009: 13.3; 2010 Est.: (not specified)\n- Exports, f.o.b. (percentage change): 2007: 14.1; 2008: 26.9; 2009: -28.0; 2010 Est.: (not specified)\n- Oil and gas export volume (percentage change): 2007: 4.2; 2008: -7.5; 2009: -2.5; 2010 Est.: (not specified)\n- Imports, f.o.b. (percentage change): 2007: 49.5; 2008: 24.0; 2009: -12.7; 2010 Est.: 37.5\n- Terms of trade (percentage change): 2007: 1.2; 2008: 16.6; 2009: -21.6; 2010 Est.: (not specified)\n- Price of Nigerian oil (US$ per barrel): 2007: 71.1; 2008: 97.0; 2009: 61.8; 2010 Est.: 78.9\n- Nominal effective exchange rate (end of period): 2007: 99.8; 2008: 100.6; 2009: 82.2; 2010 Est.: (not specified)\n- Real effective exchange rate (end of period): 2007: 109.5; 2008: 123.8; 2009: 109.7; 2010 Est.: (not specified)\n- External debt outstanding (US$ billions): 2007: 4.0; 2008: 4.5; 2009: 4.8; 2010 Est.: (not specified)\n- Gross international reserves (US$ billions): 2007: 51.3; 2008: 53.0; 2009: 42.4; 2010 Est.: 34.1\n  - (equivalent months of imports of goods and services): 2007: 10.1; 2008: 8.0; 2009: (not specified)\n- Notes:\n  - Sources: Nigerian authorities; and IMF staff estimates and projections.\n  - Includes all components of the proposed sovereign wealth fund.\n  - Large errors and omissions in the balance of payments suggest that the current account surplus is overestimated by a significant (but unknown) amount.\n  - Includes $2.6 billion in 2009 on account of the SDR allocation.\n\nSource: Public Information Notice (PIN) No. 11/25, February 17, 2011.\n\n---\n\n\n References\n\n- Nigeria and the IMF\n- Public Information Notices\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1125"
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    "Published: February 17, 2011",
    "Nigeria weathered the global economic recession and a domestic banking crisis \"reasonably well.\"",
    "Economic growth:",
    "Inflation: \"stuck in the low double digits for the past two years.\"",
    "Foreign reserves: have been falling as the Central Bank of Nigeria (CBN) focused on maintaining exchange rate stability and low interest rates.",
    "Fiscal policy in 2010:",
    "Monetary policy actions:",
    "Projections:",
    "Upside risks:",
    "Downside risks:",
    "General assessment:",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Central bank activities and financial sector:",
    "Real GDP (at 1990 factor cost, annual percentage change): 2007: 6.4; 2008: 6.0; 2009: 7.0; 2010 Est.: 8.4",
    "Oil and Gas GDP (annual percentage change): 2007: -4.5; 2008: -6.2; 2009: 0.5; 2010 Est.: 11.1",
    "Non-oil GDP (annual percentage change): 2007: 9.5; 2008: 9.0; 2009: 8.3; 2010 Est.: 7.9",
    "Production of crude oil (million barrels per day): 2007: 2.21; 2008: 2.09; 2009: 2.16; 2010 Est.: 2.36",
    "Nominal GDP at market prices (trillions of naira): 2007: 20.9; 2008: 24.6; 2009: 25.1; 2010 Est.: 32.3",
    "Nominal non-oil GDP at factor cost (trillions of naira): 2007: 13.1; 2008: 15.2; 2009: 17.4; 2010 Est.: 21.4",
    "Nominal GDP per capita (US$): 2007: 1,153; 2008: 1,401; 2009: 1,112; 2010 Est.: 1,387",
    "Consumer price index (annual average): 2007: 5.4; 2008: 11.6; 2009: 12.5; 2010 Est.: 13.8",
    "Consumer price index (end of period): 2007: 6.6; 2008: 15.1; 2009: 13.9; 2010 Est.: 12.8",
    "Consolidated government operations (percent of GDP):",
    "Excess Crude Account / Sovereign Wealth Fund (US$ billions): 2007: 14.2; 2008: 19.7; 2009: 7.1; 2010 Est.: 3.4",
    "Money and credit (Change in percent of broad money at the beginning of the period):",
    "Current account balance (percent of GDP) (percentage change, unless otherwise specified): 2007: 18.7; 2008: 15.7; 2009: 13.3; 2010 Est.: (not specified)",
    "Exports, f.o.b. (percentage change): 2007: 14.1; 2008: 26.9; 2009: -28.0; 2010 Est.: (not specified)",
    "Oil and gas export volume (percentage change): 2007: 4.2; 2008: -7.5; 2009: -2.5; 2010 Est.: (not specified)",
    "Imports, f.o.b. (percentage change): 2007: 49.5; 2008: 24.0; 2009: -12.7; 2010 Est.: 37.5",
    "Terms of trade (percentage change): 2007: 1.2; 2008: 16.6; 2009: -21.6; 2010 Est.: (not specified)",
    "Price of Nigerian oil (US$ per barrel): 2007: 71.1; 2008: 97.0; 2009: 61.8; 2010 Est.: 78.9",
    "Nominal effective exchange rate (end of period): 2007: 99.8; 2008: 100.6; 2009: 82.2; 2010 Est.: (not specified)",
    "Real effective exchange rate (end of period): 2007: 109.5; 2008: 123.8; 2009: 109.7; 2010 Est.: (not specified)",
    "External debt outstanding (US$ billions): 2007: 4.0; 2008: 4.5; 2009: 4.8; 2010 Est.: (not specified)",
    "Gross international reserves (US$ billions): 2007: 51.3; 2008: 53.0; 2009: 42.4; 2010 Est.: 34.1",
    "Notes:",
    "[Nigeria and the IMF](http://www.imf.org/external/country/NGA/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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