IMF urges Nigeria to tackle inflation
From Madu Onuorah and Mathias Okwe (Abuja)
FOR Nigeria to get out of its economic crisis, the Federal Government must ensure a drastic cut in the nation's rate of inflation, according to the International Monetary Fund (IMF).
The world lending body is, however, in support of the Federal Government's on-going economic reforms, including the planned reduction in its workforce.
IMF's Managing Director, Mr. Rodrigo de Rato, concluded his two-day visit to Nigeria yesterday, with words of advice on how to lift the economy.
The May 2004 report of the Federal Office of Statistics (FOS) put the country's current inflation rate at 19.4 per cent. The year's budget has as target the reduction of inflation rate to a single digit.
De Rato, at a discussion session with Nigeria's business community, said that the current inflation rate is a dis-incentive to investment.
President Olusegun Obasanjo, at another session with the IMF helmsman, expressed confidence in his reform measures, disclosing that he was preparing the grounds for the nation's economic revival.
De Rato said: "Adopting sound anti-inflationary policies are very essential to attracting private sector investment."
He said that the IMF had noted that African countries which have succeeded in stabilising their macro-economic situations achieved sustained rate of economic growth.
He called on Nigeria to establish its home grown economic programme in line with its political and social needs.
"Our role as an international financing institution is to help governments find the best technical and economic approaches for their programmes," he said.
Obasanjo said that the government's economic reform measures had given the management of the economy back to Nigerians.
The reforms, according to the President, are preparing the grounds for the rapid transformation of the economy.
The Federal Government, he pledged, will spare no effort to achieve peace and security in Nigeria and Africa because "conflicts on the continent have negative implications for the economic development of its people."
De Rato had earlier also given support for the government's economic reforms and described the programme as a quick recovery plan.
Of particular note, he said, are the government's plan to raise banks' paid-up capital to an all high N25 billion and the reduction of the public sector workforce believed to be overbloated.
De Rato described the economic policies as in order because they would introduce transparency and efficiency in the polity.
He revealed that Nigeria had commissioned the IMF to monitor the implementation of the country's programme. He added that the Fund's Executive Board had endorsed an intensified surveillance framework, with quarterly staff visits and twice-yearly information reports to the Board.
De Rato explained that the IMF was ready to assist Nigeria in every way it could within its mandate and would also provide support through regular policy discussions with the government and the provision of technical assistance in the area of budgetary reforms and monetary management.
Commenting on the country's fiscal policies, the IMF chief said the Fund's monitoring of the budget in the first six months showed positive performance and that the decision of the Nigerian government to save the country's excess crude revenue was wise.
De Rato however advised that the excess crude be prudently used for the provision of infrastructure, rehabilitation of all the ailing sectors and other areas of need for poverty reduction.
The visit, which was De Rato's second outside the IMF Secretariat since his appointment, and the first to Africa, he explained, was to enable him interact with the people. It was also to enable his team formulate short, medium and long term plans for member countries.
He said: "In my discussions with the authorities, we agreed that the challenges of achieving higher growth and poverty reduction remained formidable. Nigeria needs to persevere with the stabilisation effort, and reinforce its structural reform agenda with regard to privatisation, financial sector restructuring, and public sector reforms".
De Rato added: "We further agreed on the importance of the timely finalisation 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."
He commended the government "for its commitment to improve transparency as evidenced by Nigeria's participation in EITI, NEPAD's peer review mechanism, and the G8 transparency initiative."
The IMF boss added: "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."
