The International Monetary fund (IMF), says the uncertainty in Buhari’s economic policies has exacerbated economic hardship for Nigerians while keeping foreign investors away from investing in the real sector.
During a visit to Nigeria, a team of experts from the IMF argued that the federal government’s over optimistic revenue projections is responsible for why CBN’s lending to the government has continue to increase at an alarming rate.
“The pace of economic recovery remains slow, as depressed private consumption and investors’ wait-and-see attitude kept growth in the first half of the year at 2 percent, a rate significantly below population growth.”
It, however, acknowledged that the inflation rate has fallen due to lower food price inflation though it might rise again if major reforms, like an increase in VAT, are passed next year and an increase in the minimum wage.
The team highlights the increasing reliance on CBN loans to the Federal Government, helping the latter fund its huge revenue deficits amidst over-optimistic projections.
By continuing to rely on the CBN the finance its expenditure (mostly recurrent) the government puts the economy in dire straits at it creates a hole that may not be immediately closed if government revenues continue to be lower than expected. The IMF also called for a tight monetary policy based on “conventional tools” and requested for initiatives that can increase revenues without having to always rely on CBN handouts.