{
  "title": "IMF Staff Concludes Visit to Nigeria",
  "publication": "IMF News, October 8, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/10/08/pr19368-nigeria-imf-staff-concludes-visit",
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  "summary": "Press Release No. 19/368; mission visited Lagos and Abuja from September 25 to October 7, 2019.",
  "publishDate": "2019-10-08",
  "sections": [
    {
      "heading": "Mission overview and context",
      "content": "- Press Release No. 19/368; mission visited Lagos and Abuja from September 25 to October 7, 2019.\n- End-of-Mission statement reflects IMF staff views and does not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.\n- Statement attributed to an IMF staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria."
    },
    {
      "heading": "Key macroeconomic findings",
      "content": "- Growth\n  - Growth in the first half of the year was 2 percent, a rate significantly below population growth.\n  - Outlook under current policies: growth is expected to pick up to 2.3 percent this year driven by a continuing recovery in the oil sector and regaining momentum in agriculture following a good harvest.\n- Inflation and prices\n  - Headline inflation has fallen, reaching its lowest level since January 2016, helped by lower food price inflation.\n  - Inflation will likely pick up in 2020 following rising minimum wages and a higher VAT rate, despite a tight monetary policy.\n- External sector and reserves\n  - The current account turned into a deficit in the first half of 2019 after three years of surpluses, spurred by one-off increases in imports.\n  - Gross international reserves have fallen to below $42 billion at end-August 2019, mainly reflecting a decline in foreign holdings of short-term securities and equity.\n  - The exchange rate in various windows remained stable, helped by steady sales of foreign exchange by the Central Bank of Nigeria (CBN).\n  - Capital outflows are weighing on international reserves and the current account’s shift to a deficit is expected to persist.\n- Fiscal situation and public finances\n  - Carryover from 2018 to 2019 helped increase public investment spending in the first half of 2019.\n  - Revenue underperformed significantly relative to the budget target in the first half of 2019; over-optimistic revenue projections led to higher financing needs than envisaged.\n  - Elevated fiscal deficits rely on central bank financing, resulting in overreliance on expensive borrowing from the CBN to finance the fiscal deficit.\n  - Federal Government interest payments continue to absorb more than half of revenues in 2019.\n- Banking sector and financial stability\n  - Banking sector prudential ratios are improving.\n  - Lending has recently increased; new regulations to spur lending should be carefully assessed for potential unintended consequences on banks’ asset quality, maturity structure, prudential buffers, and the inflation target.\n  - Continued strengthening of banks’ capital buffers would enhance banking sector resilience.\n- Policy implementation and structural issues\n  - Structural reforms on governance and corruption and implementation of the power sector recovery plan remain essential to boosting prospects for higher and more inclusive growth.\n  - The team held productive discussions with senior government and central bank officials, representatives of the banking system, the private sector, and international development partners."
    },
    {
      "heading": "Projections and policy implications",
      "content": "- Growth projection: pick up to 2.3 percent this year.\n- Inflation projection: likely to pick up in 2020 following rising minimum wages and a higher VAT rate.\n- External balances: current account deficit and continued capital outflows expected to weigh on international reserves."
    },
    {
      "heading": "Urgent policy recommendations (coherent, coordinated package)",
      "content": "- Fiscal policy\n  - Implement an ambitious revenue-based fiscal consolidation that builds on the initiatives laid out in the Strategic Revenue Growth Initiative.\n  - Stop overreliance on central bank financing of the government.\n- Monetary and exchange rate policy\n  - Maintain a tight monetary policy through more conventional tools.\n  - Stop direct central bank interventions that complicate managing vulnerabilities from large amounts of maturing CBN bills (including those held by non-residents).\n  - Introduce longer-term government instruments to mop up excess liquidity.\n  - Move towards a uniform market-determined exchange rate.\n- Revenue and tax measures\n  - Implement planned revenue initiatives under the 2020 budget, including a VAT reform that increases the rate, introduces a minimum registration threshold and exempts basic food products, to partially offset declining oil revenues and the impact of higher minimum wages.\n- Financial sector measures\n  - Carefully assess and, if needed, revisit new regulations to spur lending to avoid weakening asset quality and prudential buffers.\n  - Continue strengthening banks’ capital buffers.\n- Structural reforms\n  - Prioritize governance and anti-corruption reforms and implement the power sector recovery plan to boost inclusive growth prospects.\n- Coordination\n  - Design and implement the comprehensive package with close coordination within the economic team and the newly-appointed Economic Advisory Council.\n\n---\n\n\n References\n\n- Nigeria and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/10/08/pr19368-nigeria-imf-staff-concludes-visit"
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    "Published: October 8, 2019",
    "Press Release No. 19/368; mission visited Lagos and Abuja from September 25 to October 7, 2019.",
    "End-of-Mission statement reflects IMF staff views and does not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.",
    "Statement attributed to an IMF staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria.",
    "Growth",
    "Inflation and prices",
    "External sector and reserves",
    "Fiscal situation and public finances",
    "Banking sector and financial stability",
    "Policy implementation and structural issues",
    "Growth projection: pick up to 2.3 percent this year.",
    "Inflation projection: likely to pick up in 2020 following rising minimum wages and a higher VAT rate.",
    "External balances: current account deficit and continued capital outflows expected to weigh on international reserves.",
    "Fiscal policy",
    "Monetary and exchange rate policy",
    "Revenue and tax measures",
    "Financial sector measures",
    "Structural reforms",
    "Coordination",
    "[Nigeria and the IMF](http://www.imf.org/external/country/NGA/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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