## IMF Executive Board Concludes 2018 Article IV Consultation with Nigeria _IMF News, March 7, 2018_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2018 Article IV Consultation with Nigeria](https://www.imf.org/en/news/articles/2018/03/07/pr1876-imf-executive-board-concludes-2018-article-iv-consultation-with-nigeria) ## Other formats - [Markdown version](/en/news/articles/2018/03/07/pr1876-imf-executive-board-concludes-2018-article-iv-consultation-with-nigeria/index.md) - [Structured JSON version](/en/news/articles/2018/03/07/pr1876-imf-executive-board-concludes-2018-article-iv-consultation-with-nigeria/index.json) - [Bundle manifest](/en/news/articles/2018/03/07/pr1876-imf-executive-board-concludes-2018-article-iv-consultation-with-nigeria/bundle-manifest.json) ## Bibliographic details - Published: March 7, 2018 --- ### Executive Board assessment - Executive Directors agreed with the thrust of the staff appraisal. - Welcomed Nigeria’s exit from recession and the strong recovery in foreign exchange reserves, helped by rising oil prices and new foreign exchange measures. - Commended progress implementing the Economic Recovery and Growth Plan, including: - start of a convergence in foreign exchange windows, - tight monetary policy, - improvements in tax administration, - significant strides in improving the business environment. - Noted remaining challenges: non‑oil, non‑agricultural sector has not picked up; inflation remains high and sticky; unemployment is rising; poverty is high. - Urged comprehensive and coherent policy actions as urgent. ### Macroeconomic outlook and growth - The Nigerian economy is exiting recession but remains vulnerable. - Economic growth reached 0.8 percent in 2017, driven mainly by recovering oil production. - Growth projections: - 2018: 2.1 percent - 2019: 1.9 percent - Improved oil prices expected to provide relief for external and fiscal accounts and support growth recovery. - Medium-term projections indicate growth would remain relatively flat and per capita real GDP would continue to decline under unchanged policies. ### Inflation, monetary policy, and reserves - Inflation developments: - annual average CPI: 16.5 (2016), 14.0 (2017), 14.8 (2018 projection) - CPI end of period: 18.5 (end-2016), 15.4 (end-2017), 14.5 (end-2018), 16.6 (end-2019) - Central Bank actions: - Tight monetary policy contributed to better foreign exchange availability, increased reserves to a four-year high, and contained inflationary pressures. - Directors commended the tightening bias in 2017 and recommended continuation until inflation is within the single digit target range. - Recommended continued strengthening of the monetary policy framework and transparency; some Directors urged consideration of a higher monetary policy rate, a symmetric application of reserve requirements, and no direct central bank financing of the economy. - Gross international reserves (US$ billions): - 27.0 (2016), 39.2 (2017), 36.6 (2018 projection) - Equivalent months of imports of G&Ss: 6.7 (2016), 7.3 (2017), 6.2 (2018 projection) ### Fiscal position and public debt - Fiscal balances and revenue: - Total revenues and grants (percent of GDP): 5.6 (2016), 7.4 (2017), 7.1 (2018 projection) - Of which: oil and gas revenue (percent of GDP): 2.5 (2016), 3.7 (2017), 3.3 (2018 projection) - Total expenditure and net lending (percent of GDP): 11.2 (2016), 11.9 (2017), 11.6 (2018 projection) - Overall balance (percent of GDP): -3.9 (2016), -5.5 (2017), -4.5 (2018 projection), -4.4 (2019 projection) - Non-oil primary balance (percent of non-oil GDP): -5.1 (2016), -7.0 (2017), -7.6 (2018 projection), -6.7 (2019 projection) - Non-oil revenue (percent of non-oil GDP): 3.6 (2016), 3.4 (2017), 3.9 (2018 projection), 4.0 (2019 projection) - Public debt metrics: - Public gross debt (percent of GDP): 19.6 (2016), 22.3 (2017), 25.3 (2018 projection), 26.0 (2019 projection) - FGN debt (percent of GDP): 16.7 (2016), 18.4 (2017), 20.8 (2018 projection), 20.7 (2019 projection) - FGN interest payments (percent of FGN revenue): 61.7 (2016), 71.9 (2017), 59.7 (2018 projection), 68.0 (2019 projection) - Directors emphasized a growth‑friendly fiscal adjustment: - Frontload non‑oil revenue mobilization and rationalize current expenditure to reduce the ratio of interest payments to revenue. - Improve tax administration; consider more ambitious tax policy measures including reforming the value‑added tax, increasing excises, and rationalizing tax incentives. - Implement an automatic fuel price‑setting mechanism, sound cash and debt management, improved transparency in the oil sector, increased monitoring of state and local government fiscal positions, and substantially scaled-up social safety nets. ### External sector and oil - Oil and production: - Production of crude oil (million barrels per day): 1.81 (2016), 1.90 (2017), 2.10 (2018 projection), 2.20 (2019 projection) - Price of Nigerian oil (US dollar per barrel): 44.6 (2016), 54.4 (2017), 67.8 (2018 projection), 63.9 (2019 projection) - Trade and current account: - Exports of goods and services (annual percent change): -21.6 (2016), 25.7 (2017), 30.1 (2018 projection), 0.0 (2019 projection) - Imports of goods and services (annual percent change): -34.7 (2016), 34.3 (2017) - Current account balance (percent of GDP): 0.7 (2016), 2.0 (2017), 0.1 (2018 projection) - Directors welcomed recent foreign exchange measures and efforts to strengthen external buffers; urged unification of the exchange rate and removal of remaining restrictions and multiple exchange rate practices. - After arrears clearance in 2018, fiscal deficit would narrow and public debt levels would remain relatively low, but interest payments-to-Federal Government revenue ratio would remain high. - Stress scenarios highlight sensitivity of external and public debt to oil exports and naira depreciation; upside risk from faster implementation of infrastructure projects and higher international oil prices. ### Financial sector and banking risks - Banking sector vulnerabilities noted: rising banking sector risks should be contained. - Directors welcomed central bank commitment to increase capital buffers by stopping dividend payments by weak banks. - Recommended an asset quality review to identify potential capital needs. - Called for enhanced risk‑based banking supervision, strict enforcement of prudential requirements, and a revamped resolution framework. ### Structural reforms and governance - Continued structural reform implementation needed to diversify the economy and promote private‑sector‑led growth. - Priority actions include: - Implement power sector recovery plan, - Invest in infrastructure, - Accelerate anti‑corruption and transparency initiatives, - Update and implement financial inclusion and gender strategies. - Commended improvements in quality and availability of economic statistics and encouraged further efforts to address remaining gaps. ### Key indicators (selected) - Real GDP (at 2010 market prices): -1.6 (2016), 0.8 (2017), 2.1 (2018 projection), 1.9 (2019 projection) - Oil and Gas GDP: -14.4 (2016), 7.6 (2017), 10.8 (2018 projection), 5.7 (2019 projection) - Non‑oil GDP: -0.3 (2016), 0.2 (2017), 1.3 (2018 projection), 1.5 (2019 projection) - Nominal GDP at market prices (trillions of naira): 102.6 (2016), 121.0 (2017), 142.9 (2018 projection), 166.2 (2019 projection) - Nominal non-oil GDP (trillions of naira): 97.2 (2016), 113.1 (2017), 131.4 (2018 projection), 154.7 (2019 projection) - Nominal GDP per capita (US$): 2,254 (2016), 2,099 (2017), 2,268 (2018 projection), 2,567 (2019 projection) - Gross national savings (percent of GDP): 13.2 (2016), 14.9 (2017), 13.3 (2018 projection), 13.6 (2019 projection) - Investment (percent of GDP): 12.6 (2016), 12.9 (2017), 13.4 (2018 projection) - Credit to the private sector (y-o-y,%): -3.3 (2016), 1.0 (2017) ### Risks - Balanced risks with main downside risks: - Lower oil prices, - Tighter external market conditions. - Domestic downside risks include: - Heightened security tensions, - Delayed fiscal policy response, - Weak implementation of structural reforms. - Upside risks: - Faster than expected implementation of infrastructure projects, - Further uptick in international oil prices providing positive spillovers into the non-oil economy. *Source: IMF press release "IMF Executive Board Concludes 2018 Article IV Consultation with Nigeria", March 7, 2018.* --- ## References - [Staff Report](https://www.imf.org/en/publications/cr/issues/2018/03/07/nigeria-2018-article-iv-consultation-press-release-staff-report-and-statement-by-the-45699) - [Selected Issues](https://www.imf.org/en/publications/cr/issues/2018/03/07/nigeria-selected-issues-45700) - [Nigeria and the IMF](http://www.imf.org/external/country/NGA/index.htm) - [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2018/03/07/pr1876-imf-executive-board-concludes-2018-article-iv-consultation-with-nigeria_