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T The International Monetary Fund (IMF) has stated that the risk associated with loans limits the volume of loans granted by banks.
This opinion was among the preliminary findings of IMF staff at the end of the year. The IMF team, led by Amine Mati, Chief Resident Representative and Head of Mission for Nigeria, traveled to Nigeria from June 27 to July 9 to discuss recent economic and financial developments, update Macroeconomic projections and
At the end of the visit, Mati made the following statement: "Higher oil prices and short-term portfolio inflows have alleviated external and fiscal pressures, but recovery remains difficult. International reserves remained stable at around $ 47 billion, supported by some convergence of existing foreign exchange windows, and despite some reversal in foreign inflows since April. Inflation has dropped to its lowest level in over two years. Real GDP rose 2% in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-agricultural non-farm sector remains weak as declining purchasing power is weighing on consumer demand and credit risk continues to limit bank lending. This includes specific and sustainable measures to increase currently low tax revenues – including avoiding new tax exemptions – and to ensure that fiscal targets are met even in an election year. This process should be supported by the maintenance of a strict monetary policy through appropriate monetary policy instruments that will help contain inflationary pressures and support a move towards a market-determined uniform exchange rate. Moving forward with structural reforms is necessary to boost inclusive growth, especially in the energy sector where more rapid progress would be needed to ensure sustainable financing of financial deficits in the sector.
but the revenue shortfalls and the late adoption of the 2018 budget hamper its implementation. Revenue from rising oil prices is limited by net retail fuel sales losses, while non-oil revenue is still below expectations, with returns from tax measures including VAID (Voluntary Asset Income Scheme) ) and increased tax audits. Current expenditure remains in line with expectations. The carry-over from 2017 to 2018 has contributed to the increase in capital expenditures during the first four months of 2018, despite the late approval of the 2018 budget. The decline in yields has maintained payments of $ 20 million. interest within the budgeted envelope, but the federal government's interest / revenue ratio is expected to absorb more than half of the revenue this year.
Continuing, he said that reforms to improve the business environment are progressing. identifying priority investment projects and adopting the Companies and Related Matters Act (CAMA) – a legislative milestone for private sector development. The implementation of the energy sector turnaround plan is advancing through a mini-grid policy and regulations on eligible customers and meter asset providers.
"According to current policies, the outlook remains difficult. Growth is expected to reach about 2% by 2018, led by lower than expected oil production and relatively low agricultural growth. The budget deficit would narrow slightly as higher oil revenues offset the increase in spending, including those projected in a supplementary budget. Inflation would recover in the second half of 2018 as base effects dissipate and increased spending and supply constraints in agriculture put pressure on prices. The increase in oil exports would keep the current account surplus, helping to stabilize gross international reserves, even if the current rate of foreign portfolio outflows continues, "said Mati.
"The team had fruitful discussions with senior government officials and the central bank. He also met with representatives of the banking system, the private sector, civil society and international development partners. The team would like to thank the authorities and all those with whom she has spoken for the productive discussions, the excellent cooperation and the warm hospitality. "
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