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IMF Cuts Nigeria's 2020 Growth Forecast

World Bank IMF and Dev Agencies	1232 VIEWS
World Bank IMF and Dev Agencies
1232 VIEWS

Thursday, February 20, 2020 /05:11 PM / By FDC / Header Image Credit: Businessamlive

The IMF has revised downwards Nigeria's 2020 GDP growth forecast to 2.0% from 2.5%.

This is 0.17% lower than the average growth of 2.17% in the first three quarters of 2019. The reduction in the growth projection is reflective of dwindling global oil prices. Brent prices declined 11.17% to $58.63pb (YTD) as a result of the coronavirus outbreak.

This, at a time when OPEC is considering a cut in output, is detrimental to Nigeria's fiscal buffers and poses a huge threat to the implementation of the 2020 budget. The country's fiscal deficit could widen beyond the current level of N2.18trn (1.52% of GDP).

The Fund noted a slow pace of economic growth, rising inflation and increased external vulnerabilities and recommended the following:

An adjustment in policies

Further monetary tightening - through more conventional methods
Adoption of a uniform and more flexible exchange rate
Structural reforms to boost investments
Removal of restrictions on access to foreign exchange
Resolving the issues surrounding the re-opening of the land borders

Improvement in non-oil revenue mobilization
Introduction of longer-term government instruments to mop up excess liquidity

Also, the Bankers Committee met on February 18. The committee's deliberation was centered on the possibility of collaborating with the Federal Government in bridging the country's infrastructure gap.

The Africa Development Bank (AfDB) had earlier estimated Nigeria's infrastructure gap to cost approximately $3 trillion by 2044 (about $100billion annually).

Bridging the infrastructure gap is a step towards achieving sustainable development.

Hence, it is believed that this public private partnership (PPP) model towards infrastructural development will help to stimulate growth albeit in the medium to long term.