The International Monetary Fund (IMF) says Nigeria’s economy is recovering from a historic downturn thanks to government policy support, rising oil prices and international financial assistance.
The IMF revealed this in a statement issued from its headquarters in Washington D.
The organization said Nigeria emerged from recession in the fourth quarter of 2020 and production increased by 4.
1% (y-o-y) in the third quarter, with broad-based growth except for the oil sector, which faces security and technical challenges.
“Growth is projected at 3% for 2021.
Headline inflation rose sharply during the pandemic, reaching a peak of 18.
2% year-over-year in March 2021, but has since fallen to 15.
6% in December, helped by the new harvest season and the opening of land borders.
Reported unemployment rates (end of 2020) have yet to decline, but more recent monthly COVID-19 surveys show employment is back to pre-pandemic levels,’ he said.
Despite the recovery in oil prices, the general government budget deficit is expected to widen in 2021 to 5.
9% of gross domestic product (GDP), reflecting implicit fuel subsidies and increased security spending, according to the IMF.
Additionally, he said the consolidated ratio of government revenue to GDP was 7.
5 percent remained among the lowest in the world.
“After registering a historic deficit in 2020, the current account improved in 2021 and gross foreign exchange reserves improved, supported by the allocation of IMF SDRs and investments in Eurobonds in September 2021.
Despite the authorities’ proactive approach to contain COVID-19 infection and death rates and the recent improvement in growth, socio-economic conditions remain a challenge.
Food insecurity levels have increased and the poverty rate is estimated to have increased during the pandemic.
The international body, however, said the outlook faced balanced risks, saying that on the downside, low vaccination rates leave Nigeria vulnerable to future pandemic waves and new variants, including the ongoing Omicron variant. .
He said higher debt service to government revenue (through a U.
interest rates and/or increase borrowing) poses risks to fiscal sustainability.
“On the upside, the non-oil sector could be stronger, benefiting from its recent growth momentum, favorable credit policies and higher output from the new Dangote refinery.
Nigeria’s ratification of the African Continental Free Trade Agreement could also provide a positive boost to the non-oil sector while oil production could rebound, supported by the more generous terms of the Petroleum Industry Act.
According to the statement, under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually annually.
A team of staff visits the country, collects economic and financial information and discusses with officials the country’s economic developments and policies.
Back at headquarters, the staff drafts a report which serves as the basis for the discussions of the Board of Directors.
Play the GK quiz, increase your knowledge and WIN 📚
IMF attributes Nigeria’s economic growth to improved government policies
Subscribe to our Youtube channel