Nigeria’s Economic Outlook is Challenging—IMF Declares

March 5, 2024
Nigeria's economic growth projection

By Aduragbemi Omiyale

The International Monetary Fund (IMF) has alerted that tough times await Nigerians, though it retained its gross domestic product (GDP) growth forecast for 2024 at 3.2 per cent.

In a statement on the conclusion of the IMF Staff 2024 Article IV Mission to Nigeria, the global lender said the administration of President Bola Tinubu “inherited a difficult economic situation marked by low growth, low revenue collection, accelerating inflation, and external imbalances built up over years.”

However, it praised the government’s approval of an effective and well-targeted social protection system, including the release of grains, seeds, and fertilizers, as well as the introduction of dry-season farming.

It also said the “recent improvements in revenue collection and oil production are encouraging,” noting that, “non-oil revenue collection improved by 0.8 per cent of GDP in 2023, helped by naira depreciation.”

“Oil production reached 1.65 million barrels per day in January as the result of enhanced security,” the IMF stated in the note made available to Business Post.

The IMF emphasised that it commended the uptick in earnings because “Nigeria’s low revenue mobilisation constrains the government’s ability to respond to shocks and to promote long-term development.”

However, it warned that, “The capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to 3 per cent of GDP in 2024.”

The bank also applauded the Central Bank of Nigeria (CBN) for raising the Monetary Policy Rate (MPR) by 4.00 per cent to 22.75 per cent last week, indicating an increase of 10.25 per cent since May 2022.

“This decision should help contain inflation, which reached 29.9 per cent year-on-year in January 2024, and pressures on the Naira,” a part of the statement said.

It advised the Nigerian authorities to address rising food insecurity, noting that about 8 per cent of Nigerians are deemed food insecure.

Aduragbemi Omiyale

Aduragbemi Omiyale is a journalist with Business Post Nigeria, who has passion for news writing. In her leisure time, she loves to read.

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