IMF Offers to Help Recover Looted Funds
Obasanjo: Nigeria in full control of economy _FG saves N7bn
From Josephine Lohor and Kunle Aderinokunin Abuja
The International Monetary Fund (IMF) yesterday said it would assist Nigeria in whatever way to repatriate her funds stashed in foreign countries by corrupt leaders and government officials. The Fund also expressed support for the N25 billion new capital base for banks.
However, President Olusegun Obasanjo said Nigeria had taken full control of the economy even as the Federal Government disclosed that it had saved N7 billion through budgetary discipline.
"We will give our support for any action, legal action whatever that is taken to guarantee corruption-related revenue are taken into the judicial procedure and returned to the Nigerian people," said the Managing Director IMF, Mr. Rodrigo de Rato, at a press briefing to end his visit to Nigeria.
The Federal Government has recovered some of the money stashed in foreign accounts by the late military leader, Gen. Sani Abacha.
An estimated $4 billion is believed to have been stashed in foreign accounts by Abacha and his associates.
"Certainly the IMF is very active in the fight against corruption and the transparency of public resources. We valued the initiative of the Nigerian government to apply the Extractive Industries Transpa-rency Industries (EITI)," he added.
Earlier at an interactive session with the private sector, de Rato expressed the IMF support for the reforms in the banking sector which he said deserve a lot of attention to succeed.
The Central Bank of Nigeria (CBN) last month directed banks to increase their capital base from N2 billion to N25 billion effective December 2005.
Apparently referring to the N25 billion new capital base for the banks, de Rato said banks could merge to meet the conditions set by the Central Bank.
The IMF chief executive said the financial sector reform, if carefully implemented, would provide the economy with a sound banking system.
" Certainly, the plan that the government is putting forward in the banking sector deserves a lot of attention because it would provide sound banking institutions for the nation."
"The establishment of sound banking system", he added, "is a key element for providing capital required to finance development projects and to make other investments."
De Rato who was the finance minister of Spain for eight years, said that "if you need to have a constant flow of investments into key sectors like energy, you need to have a regulated system that would provide revenue to finance that investment. If you don't solve that problem you will not get enough investment."
According to him, "the change in regulatory rule that the government is addressing is what we have to do to be able to attract enough investment for the country in petrochemical, oil and gas, roads and all these are related to the capacity of the economy to provide investments.
"It is very important that the regulatory and legal systems have to provide that type of investment that the economy needs."
Answering a question on the IMF's real value to the Nigerian economy, he explained that the confidence of the international community Nigeria enjoys derives from the positive recommendation by the Fund, which enhances the inflow of investment into the country.
According to him, "the collaboration we establish with government through monitoring of performance could enhance confidence in the international community. Without confidence, investments are difficult to make. That is why we have details of Nigerian economic performance. We are going to be responsible to public opinion."
On debt issues and the role the IMF plays, Rato said, " It is a question of debtor and creditor. We know what is the problem. How can we collaborate for positive negotiation by enhancing the confidence of debtor and creditor? By doing what we are doing-by monitoring and by ensuring that Nigeria's short and long-term objectives are aligned."
Also speaking at the interactive session, Finance Minister Ngozi Okonjo-Iweala said the Federal Government has so far saved about N7 billion by avoiding financing deficit through ways and means.
Ways and means is a measure whereby the government would ask the CBN to print currency to finance fiscal deficit in the economy.
According to Okonjo-Iweala, "for the first time, we have already saved N7billion by not doing that (ways and means). If I'm wrong, correct me. This is what the CBN has told us."
She said for the fact that the government adopts this tight fiscal stance, inflation, which would have skyrocketed, has been moderated. She added that the government would have to do more on the fiscal and monetary policy to bring inflation further down. According to her, "we managed the fiscal so tightly. And I believe that if we are not doing that, inflation would have be worse than it is now. I firmly believe that."
President of the Nigeria Economic Society (NES), Professor Sam Olofin, said the IMF should incorporate academics in public-private sector collaboration.
The representative of Nigeria Association of Chambers of Commerce, Industries, Mines, and Agriculture (NACCIMA) said, "IMF should consider stronger endorsement of our financial request, especially energy and infrastructure." He pointed out "energy reform is due, IMF can help in the area of market access for our products."
At the interactive session were chief executives from the organized private sector as well as members of the academia. Those at the session include the Managing Director, Investment Banking and Trust Company Limited, Mr. Atedo Peterside; Chairman, Nigeria Economic Summit Group (NESG), Dr. Ahmed Mansur; President, NES, Professor Olofin; Professor Ibi Ajayi of the Economics Department of the University of Ibadan; Editor-in-Chief of THISDAY Newspapers, Mr. Nduka Obaigbena; Managing Director, The Guardian, Mr. Emeka Izeze; and Chairman, Economic and Financial Crimes Commission (EFCC), Mallam Nuhu Ribadu among others.
But at a lunch he hosted for de Rato at State House, Abuja Obasanjo said that Nigeria had taken full control of its economy.
Obasanjo, while thanking de Rato for the support IMF has been giving the Federal Government's reform agenda, however, promised that his administration would ensure that its comprehensive reform package was fully implemented.
Obasanjo stated that the Federal Government, in appreciation of the fact that there was no alternative to the prudent management of the national economy if its objective of improving living conditions for all Nigerians was to be achieved, was taking steps to entrench greater probity, efficiency and accountability in the management of the economy.
He said that the Federal Government was also implementing measures and policies that would lead to greater stability in the exchange rate of the naira and a reduction in the gap between the official exchange rate and that of the parallel market.
Obasanjo also asked the international community to appreciate the fact that Nigeria's effort at maintaining peace in Africa was taking a toll on its economy.
He said that "we accept the responsibility that the situation in parts of Africa places on Nigeria. We are paying a high price for the cause of peace and stability in Africa. This needs to be more appreciated by the international community."
He said the government would also continue to do all it can to ensure that the fundamental conditions for development prevail in all parts of Nigeria and Africa.
The president added that his administration would spare no effort to achieve peace and security in Nigeria and Africa because conflicts on the continent had negative implications for the economic development of its people.
De Rato had earlier assured Obasanjo that the IMF was committed to helping the Federal Government achieve the objectives of its home-grown reform agenda.
He also said that he had had "intense and fruitful" meetings with members of the government's economic team, adding that he was convinced that with efficient management, the Nigerian economy would achieve its great potentials.
Meanwhile, de Rato, in his comment at the conclusion of his visit to Nigeria, said that the "Fund supports the overall thrust and direction of current policies, and believes that with sustained implementation of the National Economic Empowerment Strategy (NEEDS), along with that of the states' parallel strategies (SEEDS), Nigeria will be in a better position to realize its considerable growth potential."
"I am very impressed by the government's strong commitment to its far reaching economic and social reform program-the National Economic Empower-ment and Development Strategy (NEEDS).
"I welcome the implementation of a prudent set of macroeconomic policies in 2004 aimed at achieving macroeconomic stability and further enhancing Nigeria's growth prospects. In this context, efforts currently underway to enhance transparency and accountability of the public institutions in Nigeria are particularly welcome.
"These efforts include participation in the Extractive Industries Transparency Initiative (EITI), the G8 Transparency Initiative, and the African Peer Review Mechanism of the New Partnership for Africa's Development. I look forward to these efforts bearing fruit which will also allow the government to allocate scarce public resources toward poverty reduction", the IMF chief said.
He disclosed that during discussions with the Nigerian authorities, it was agreed that the challenges of achieving higher growth and poverty reduction remained formidable.
He said that Nigeria needed to persevere with the stabilization effort, and reinforce its structural reform agenda with regard to privatization, financial sector restructuring, and public sector reforms.
"We further agreed on the importance of the timely finalization and passage of the Fiscal Responsibility Bill as this would provide the legal foundation for fiscal prudence and transparency at all levels of government in Nigeria.
"I commended the government for its commitment to improve transparency as evidenced by Nigeria's participation in the EITI, NEPAD's peer review mechanism, and the G8 transparency initiative. The strengthening of the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) were important steps to fight corruption, and I hope that tangible results of these measures will become visible soon.
"My visit underscores the strong importance the IMF places on its relations with Nigeria, and on continuing dialogue with the Nigerian public. We welcome the government's request to monitor the implementation of Nigeria's program. The IMF Executive Board has endorsed an intensified surveillance framework, with quarterly staff visits and semi-annual information reports to the Board.
"The IMF stands ready to assist Nigeria in every way we can within our mandate and will continue to provide support through regular policy discussions with the government and the provision of technical assistance in the area of budgetary reforms and monetary management", he added.
According to him, "I am happy to be in Nigeria, the first stop on my visit to Africa in my role as the new Managing Director of the International Monetary Fund (IMF). I have placed Africa very high on my list of priorities and look forward to and recognize the critical role Nigeria assumes as political and economic leader and of its potential role model for other countries in Africa.
"This visit has provided me a valuable opportunity to gain a closer understanding of the Nigerian economy. It was my privilege to meet with President Obasanjo, his economic team, other senior government officials, and members of the National Assembly and state governors. I also met with representatives of the business community and labor unions, an AIDS/HIV clinic, as well as with the Nobel laureate Professor (Wole) Soyinka", he said.
De Rato who arrived Nigeria Monday had met same day with the Federal Government economic team as well as civil society groups.
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