Economy
IMF Charges Nigeria, Others to Deepen Fiscal Buffers Amid Headwinds
By Adedapo Adesanya
The International Monetary Fund (IMF) has called on Nigeria and other African countries to deepen fiscal buffers, adopt context-specific monetary policies, and advance regional economic cooperation in order to cushion the effect of global headwinds and unlock long-term inclusive growth.
The Managing Director of the Bretton Wood institution, Ms Kristalina Georgieva, said this during the launch of IMF’s latest Global Policy Agenda Report titled Anchoring Stability and Promoting Balanced Growth at the ongoing World Bank/IMF Spring Meetings in Washington.
She highlighted the continent’s mixed growth outlook and called for a renewed commitment to structural reforms.
Speaking further on fiscal reforms, she said, “Don’t hide behind excuses, and say we can’t go for more tax because, you can. There is a lot that can be done to broaden the tax base, and a lot that can be done to reduce tax evasion and tax avoidance, using technology, as some countries are doing, to chase the tax dollars, when there is the foundation for that, is a very good thing to do.”
Ms Georgieva pointed out that while Africa remained home to some of the world’s fastest-growing economies, a significant number of low-income and fragile states were increasingly falling behind, especially in the wake of slowing global growth and rising geopolitical risks.
“We have seen over the last years, the African continent having some of the fastest growing economies, but we also have seen low-income countries primarily and among the fragile conflict-affected countries falling further behind, and now this, this is a shock for the continent,” she added.
The IMF chief stated that while the direct effect of trade tariffs on most African countries was minimal, the indirect consequences, particularly, from a slowdown in global growth posed more serious challenges, especially for oil-exporting countries, like Nigeria.
“The direct impact of tariffs on most of Africa, not on all of Africa, but on most of Africa, is relatively small, but the indirect impact is quite significant.
“Slowing global growth means that, all other things being equal, they would see a downgrade. And actually, we have downgraded the growth prospects for the continent, for the oil producers, like Nigeria, falling oil prices create additional pressure on their budgets. On the other hand, for the oil importers, this is a breath of fresh air.
“In other words, different countries face different challenges. If I were to come up with some basic recommendations that apply to Africa, I would say they apply to Nigeria, Egypt, Ghana, and they apply to Cote d’Ivoire.
“First, continue on the path of strengthening your buffer levels. There is still a lot that can be done on the fiscal side, to have strength and to have the buffers for a moment of shock, and don’t use any excuses around,” Ms Georgieva noted.
The IMF managing director urged Nigeria and other governments in Africa to do more to expand their tax base and tackle leakages through digital tools. She warned against copycat monetary policies, urging central banks to respond based on country-specific inflation pressures rather than mimic regional peers.
“On the monetary policy side, we are no more in a place where you can look at the book of the central bank governor of the neighbouring country and say, ‘Oh, they’re doing this, let’s try out the same,’ because you have to really assess domestically, what your inflationary pressures are and do the right thing for your country,” she said.
Ms Georgieva also made a passionate call for Africa to rebrand its global image, stating that corruption and conflict in one country cast a long shadow over the entire region.
“But above all, make it so that the image of the whole continent changes, because now everybody suffers from wrongdoing, from corruption or conflict in one country, it throws a shadow on the rest of the continent. And finally, like Asia, there is a need to deepen inter-regional trade and cooperation, remove the obstacles.”
She also underscored the importance of boosting intra-African trade, comparing the continent’s potential to that of Asia and welcomed World Bank efforts to ease infrastructure barriers to trade.
She added: “Sometimes they are infrastructure obstacles. The World Bank is working on reducing the infrastructure obstacles to broaden trade. Africa has so much to offer the world. They have the minerals, better resources, and a young population. I think that a more unified, more collaborative continent can go a long, long way to be an economic powerhouse.”
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
By Aduragbemi Omiyale
The federal government has been advised to consider exploring other funding sources to finance its budget deficits.
Speaking with Punch recently, the chief executive of CSA Advisory, Mr Aliyu Ilias, said the current appetite for borrowing by the government cannot be sustained because it elevates debt-servicing costs.
The economist suggested the sale of some public assets and the involvement of the private sector in infrastructure financing for economic growth.
According to him, running to the debt markets to raise funds for the government is not the best route to take, as the reliance on borrowing always leads to higher debt-servicing obligations.
“The more you borrow, the more you are also incurring more debt services,” he said, tasking the government to also capitalise on increased oil revenues stemming from ongoing geopolitical tensions in the Middle East.
“The government can actually sell off some of their assets to raise more money. The government can also, if you look at the revenue we are getting from oil, it’s getting more, especially with this war. It’s another opportunity for us to actually not borrow again,” Mr Ilias submitted.
He also pointed to ongoing tax reforms as another avenue to improve government finances and narrow the fiscal gap.
“The government can also look at tax reform. The fact is that the government does not have money. The only chance for getting more money is to address the financial deficit,” he added.
By Adedapo Adesanya
Crude oil was up by $1 on Monday as Iran and Israel said they had halted attacks on each other following an appeal from US President Donald Trump.
Brent crude futures gained $1.16 or 1.3 per cent to trade at $94.25 a barrel, while the US West Texas Intermediate (WTI) crude futures were up 76 cents or 0.8 per cent to $91.30 per barrel.
Iran’s military said Monday it halted attacks on Israel after the two countries exchanged their most intense strikes in months, further straining an already shaky ceasefire as well as the US-Israeli relationship. Iran, however, said it would resume strikes if Israel continued to hit Hezbollah in Lebanon.
Israel also halted attacks on Iran, Israeli Prime Minister Benjamin Netanyahu said, stopping short of acknowledging a ceasefire that US President Donald Trump said the countries were aiming for.
President Trump said earlier that the US blockade, which was introduced in April, would remain in place “in full force” until a final peace agreement between the two warring nations is reached.
Prices gained more than 5 per cent earlier on Monday after renewed Israeli strikes on Iran and attacks on Lebanon had reduced hopes of an imminent end to the wider war.
Market analysts noted that because of the strikes, investors were concerned that flows through the Strait of Hormuz might remain restricted for longer. Roughly a fifth of the world’s daily supply of oil and liquefied natural gas passed through the waterway before US-Israeli airstrikes at the end of February unleashed the latest escalation of the Middle Eastern conflict.
Yemen’s Iran-aligned Houthis said on Monday they would ban ships linked to Israel from the Red Sea after Israel renewed its military attacks on Iran, adding to concerns about global shipping and energy flows.
In the face of the supply crisis, a sub-group under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday agreed on its fourth oil output target increase in four months. The seven members decided to increase targets by 188,000 barrels per day from July, the same as the June hike, which was adjusted down from monthly increases of 206,000 barrels per day in May and April to take into account the exit of the United Arab Emirates (UAE).
On paper, the sub-group has increased its output quotas from April to June by almost 600,000 barrels per day, but in reality, the group’s production has collapsed due to export cuts by Gulf members, averaging 33.19 million barrels per day in April compared with 42.77 million barrels per day in February.
Saudi Arabia has cut its official selling prices for crude oil to Asia in July for a second month.
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