IMF 2013 Article IV Consultation - Affirms Nigeria's Strong Economic Fundamentals


Monday, December 09, 2013 11:28 AM / FSDH Group /


The International Monetary Fund (IMF) mission visited Nigeria during November 13-26, 2013 to conduct discussions for the 2013 Article IV consultation. The mission met with the top Nigerian Economic Managers and other top private sector managers.


The mission issued a Press Release at the end of the visit which affirms the strong macroeconomic fundamentals of the Nigeria economy and highlights some pressure points in the economy that require appropriate actions.  


Major Findings of the Mission:

     It notes the strong economic growth rate and expects a growth rate of about 7% in 2014 and the Inflation rate to remain subdued in the single digits.

         The fiscal consolidation is progressing well, and should be preserved.

   It notes that the key public financial management reforms are underway, including the implementation of a Treasury Single Account (TSA) and integrated information management systems, but lower-than-budgeted oil revenues are impacting budgetary plans at Federal, State, and Local levels.

    Nigeria could be affected by a decline in the oil prices, the pace of recovery in the global economic and financial conditions, capital outflows, continued losses in oil production, and increased security concerns.

    The current monetary policy stance is appropriate. However, managing the liquidity in the system is a priority and it will be backed by the TSA.

   The ongoing initiatives to strengthen the supervisory framework, including supervision of the banking groups, should continue, and Asset Management Corporation of Nigeria’s activities phased out gradually.



      The vulnerability of the economy to the external economic shocks particularly the oil price and the foreign capital flows.

         Low fiscal buffer fueled by the oil theft and production losses.

         The low oil production.

         The possibility of fiscal profligacy due to election cycle.

         The security concerns in some parts of the country.


Risk Mitigants:

         The adoption of a flexible exchange rate in the event of persistent demand pressure.

         An improved financial crisis management capacity and a stable banking system.

         The structural and institutional reforms should be pursued resolutely.

    The access to the financial services for the small and medium-size enterprises should be improved, as well as improvements in the productivity and the competitiveness of the economy.



    The implementation of the Treasury Single Account(TSA) will significantly reduce liquidity in the inter-bank market, as well as improve fiscal effectiveness of the government

    We expect a more aggressive management of the inter-bank liquidity, which may cause interest rate in the inter-bank market to remain volatile and trend upward.

    We expect the short-to-medium-term yields on the fixed income securities to trail the expected single digit inflation rate provided the monetary policy in the advanced economies remains accommodative.


We expect a gradual shift in the current exchange rate towards N160/$1.

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