The International Monetary Fund has lauded the implementation process of the Economic Recovery and Growth Plan by the Central Bank of Nigeria.
The IMF particularly praised the convergence in foreign exchange windows and CBN’s recent decision to stop weak banks from paying dividends to shareholders.
The global financial institution, in its Article IV Consultation, an annual appraisal of a country’s economy, stated, “Directors emphasised that structural reform implementation should continue to lay the foundation for a diversified private sector‑led economy.”
They noted that, building on recent improvements in the business environment, implementing the power sector recovery plan, investing in infrastructure, accelerating efforts to strengthen anti‑corruption and transparency initiatives, and updating and implementing the financial inclusion and gender strategies, remain essential.
The Washington-based institution also commended the CBN for maintaining a tight monetary policy stance, just as it lauded it for its foreign exchange policy, which has attracted forex inflow to enhance exchange rate stability.
The report further stated, “Directors commended the Central Bank’s tightening bias in 2017, which should continue until inflation is within the single digit target range. They recommended continued strengthening of the monetary policy framework and its transparency, with a number of directors urging consideration of a higher monetary policy rate, a symmetric application of reserve requirements, and no direct Central Bank financing of the economy. A few directors urged confirmation of the appointments of the Central Bank’s board of directors and members of the monetary policy committee.
“Directors commended the recent foreign exchange measures and recent efforts to strengthen external buffers to mitigate risks from capital flow reversals. They welcomed the authorities’ commitment to unifying the exchange rate and urged additional actions to remove remaining restrictions and multiple exchange rate practices.”
The IMF also said the Nigerian economy was slowly exiting recession but remained vulnerable because its growth was tied to oil prices and improved revenues were restricted to the energy and agriculture sectors.
In addition to ongoing efforts to improve tax administration, the IMF directors underlined the need for more ambitious tax policy measures, including reforming the Value Added Tax, increasing excise, and rationalising tax incentives.
They said the implementation of an automatic fuel price‑setting mechanism, sound cash and debt management, improved transparency in the oil sector, increased monitoring of the fiscal
position of states and local governments, and substantially scaled-up social safety nets should support the adjustment.
