Buhari Govt Lacks Economic Star And Direction – IMF

Nigerian government economic policies are like, “digging a hole to fill up another hole.”
No Economist is named in the Ministerial list, for a country going into recession.
International Monetary Fund (IMF) has also called on President Buhari to continue the economic policies of his predecessor, amid uncertainty over the political and economic outlook for Africa’s biggest oil producer and economy.

Christine Lagarde, the IMF Managing Director, speaking on the sidelines of the recent World Bank-IMF Spring Meetings in Washington DC, cautioned against policy somersault from regime change, charging the new regime to continue reducing public spending and end the fuel subsidy regime, arguing that Nigerians must endure the unavoidable hardships.

According to her, “What we have observed, the last one year in particular, is that a good fiscal policy, with some tightening no doubt, a good exchange rate in order to adapt to the external shocks and some use of reserves buffer, has been fairly exceptional. In a nutshell, policies that have been adopted by the Nigerian authority have been positive.
Our sense is that some of these policies need to be continued …We will still recommend that any subsidy that is being paid out on physical resources be phased out to the possible maximum extent.”

The IMF boss argued that the Nigerian economy has actually benefitted from falling oil prices as a result of dollar appreciation in value, because dollar pricing for oil exports cushion the fall in prices.

IMF Analysts said there’s disappointment that President Muhammadu Buhari waited this long to assemble his cabinet and there is no economic stars in his cabinet to guide much-needed reform.

“There’s no economist on the (Cabinet) list that can suggest to the government ways to improve revenue generation and how to run the economy,” said Garba Kurfi, managing director of APT Securities and Funds.

The naira has lost 25 percent of its value in the past year and the stock market plummeted by 14 percent this year because of political uncertainty and halved prices for oil that provides most government revenue.

Nigeria’s Central Bank devalued the naira by 8 percent and then fixed the official exchange rate at an even lower 198 to the dollar, though it sells at 222 at exchange bureaus.

Unable to stem the slide, the Central Bank has defended the naira by restricting access to foreign currency and banning a long list of imports.

“It’s like digging a hole to fill up another hole,” said an editorial in Nigeria’s huhuonline news website.
The restrictions are “quite detrimental,” said the International Monetary Fund’s Africa director, Antoinette Sayeh.

They “are already making it harder for the average person to buy milk,” she said at the IMF annual meeting that ended in Peru this week, according to the organization’s website.

She called for a review of the restrictions and for officials to “permit the exchange rate to continue to adjust.”