Nigeria’s economic outlook for 2018 remains challenging – IMF

The International Monetary Fund (IMF) has observed that Nigeria’s economic outlook for 2018 remains challenging as private sector lending remains low and foreign exchange inflows are mostly short-term.
The International Monetary Fund (IMF) staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, visited Nigeria from June 27 to July 9, 2018 to discuss recent economic and financial developments, update macroeconomic projections, and review reform implementation.
Mati who led the team said as credit risk continues to limit bank lending, activity in the non-oil nonagricultural sector remains weak as lower purchasing power weighs on consumer demand.
At the end of the visit, Mr Mati issued the statement in Washington on Friday through Lucie Fouda, the Fund’s Press Officer.
The statement said that higher oil prices and portfolio flows had helped strengthen fiscal and external buffers, adding that action on a coherent set of policies to reduce vulnerabilities and increase growth over the medium term remained urgent.
The IMF quoted Mati as saying: “Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging.
“International reserves remained stable at about $47 billion, supported by some convergence in existing foreign exchange windows, and despite some reversal of foreign inflows since April.
“Inflation declined to its lowest level in more than two years.
Real GDP expanded by two per cent in the first quarter of 2018 compared to the first quarter of last year.
“However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.” It said corporate tax collection efforts improved but revenue shortfalls and the late adoption of the 2018 budget impeded its implementation.
“Revenue from higher oil prices is limited by net losses from retail fuel sales while non-oil revenue remains below expectations, with yields from tax administration measures – including the Voluntary Asset Income Declaration Scheme (VAID) and increased tax audits – yet to fully materialise.
“Current spending remains in line with expectations.
Carryover from 2017 to 2018 helped increase capital spending in the first four months of 2018, despite delayed approval of the 2018 budget.
“Lower yields have kept interest payments within the budgeted envelope, but the Federal Government’s interest-to-revenue ratio is expected to absorb more than half of revenues this year,” the team leader added.