…says economic recovery too slow to reduce vulnerabilities, poverty
The International Monetary Fund (IMF) on Thursday told the Nigerian government to fight corruption and serve the citizens with the country’s money.
Kristalina Georgieva, IMF managing director, said the Fund has been consistent to talk about three issues that need to be tackled in Nigeria, which include fiscal capacity, diversification of the economy, and fighting corruption.
Addressing journalists at the ongoing IMF/World Bank annual meetings in Washington, D.C., Georgieva expressed concern that Nigeria’s economic recovery remains too slow to reduce vulnerabilities and poverty in the country.
“Fight corruption and make sure that the richness of Nigeria serves Nigerians inside the country,” she said.
Georgieva said the tax collection levels in Nigeria leave quite a lot of room for improvement, and that without strengthening the fiscal position of the government, the expenditure side would suffer.
She said the IMF recommends that countries should aim for 15 percent of GDP in terms of collection to fund the responsibilities of the government, but this is quite far in Nigeria.
“If I am not wrong, we are still in the single-digit territory,” she said.
The IMF managing director noted that the Fund last year adopted a very clear, strong policy on anti-corruption, and engaged with governments to build their capacity to ensure that they serve the citizens of the country with the money of the country.
IMF is forecasting slower global growth this year and next, 3 percent in 2019 and 3.4 percent in 2020. Measured by GDP, nearly 90 percent of the world is experiencing slower growth.
This, she said, means the global economy is now in a synchronised slowdown.
“Fractures driven by trade, driven by uncertainty surrounding geopolitical tensions, and BREXIT, they are holding back growth, and they are causing hazards in this shared road we are travelling on,” she said.
Georgieva plans to focus on five priorities, one of which is to undo the harm on trade and find a lasting solution that will help build a stronger trading system.
Other priorities include to use monetary policy wisely and enable fiscal policy to play a more central role. Lagging productivity calls for measures to achieve stronger, more inclusive, and more resilient growth over the medium and long term and the final priority was to promote stronger international cooperation, and that extends well beyond trade.
Also, in response to a question on Nigeria’s proposed loan for transmission and distribution, the World Bank said legacy debts from past projects were making it difficult to get transmission and distribution systems running in the power sector.
Speaking at the ongoing annual meetings in Washington, DC, David Malpass, World Bank group president, said many countries have already used up their fiscal and monetary-policy space, and that structural reforms are essential.
Over $15 trillion in bonds have zero or negative yields, which amounts to frozen capital, and debt has climbed to troubling levels, Malpass said.
“We need fresh thinking to reignite growth,” he said. “As far as the specific projects, one thing I do want to mention, debt sustainability becomes very important as countries think about how the investments in electricity can be made. If there is already a lot of debt, maybe it’s legacy debt that’s left over from past projects, it makes it difficult to have the new investment that’s needed in order to get transmission and distribution systems running.”
Without specific comment on Nigeria in the area of $3 billion loan, Malpass said, “We are involved in a lot of countries on trying to have improvements in the structure of their state-owned enterprises or of their electricity systems, so that they work. And particularly in West Africa, I think there can be a lot of progress made in terms of connecting more people and having more dependable power.”
Speaking at a panel session on decoding debt, getting transparency right, Zainab Ahmed, Nigeria’s finance minister, said, “Where we want to go next is to make sure we scan the environment and make sure we have a database of all the debts that government owes, whether it is the sovereign or the subnational, and also the debt of the state-owned enterprises and debts we owe to creditors.”
She said the government also wants to be able to show more clearly the debts that are related to specific projects and debts that it owes to countries like China for major projects.
“Right now, they are reported as public debt but there is no detailed breakdown to show that they are related as project borrowing,” she said.