From Isaac Anumihe, Abuja
With Nigeria’s economy shrinking to its deepest level of 1.8 per cent since 1983 and throwing over 131 Nigerians into poverty with the outbreak of COVID-19 pandemic and low oil prices, the International Monetary Fund (IMF) yesterday announced policy options that can help reduce inflation and protect poor households livelihood.
These according to the Fund include, increasing the transparency and predictability of exchange rate management policies to reduce distortions in allocations to the private and public sector stakeholders; ensuring that agents can access foreign exchange in a timely and orderly manner at an agreed rate.
Other policy options are that Nigeria should clearly define monetary-policy priorities and objectives, with price stability as the primary goal. “Resumption of naira-denominated open-market operations (OMOs) based on a transparent issuance schedule, and signal to markets that OMOs will use short-maturity securities to achieve price stability. “Full and effective reopening of land borders for trade and strengthening regional co-operation to combat smuggling.
“Facilitation of imports for staple foods and medicines by removing them from the list of foreign exchange (FX) restrictions and replacing import bans and with tariffs that align with the ECOWAS Common External Tariff.
“Establishing mechanisms to monitor and report the Federal Government’s stock of Central Bank overdrafts to control the growth of the money supply. “Full elimination of the petrol subsidy; and design of sequenced reforms to mobilise domestic nonoil revenue in a way that does not affect the economic recovery, including increasing excise taxes on harmful consumption goods, rationalising tax expenditures, removing loopholes in tax laws, and improving tax compliance by strengthening revenue administration” it said.
Furthermore, the IMF urged Nigeria to leverage the National Social Safety Nets Programme (NASSP) to provide transfers to additional households, and temporarily increase transfers to current beneficiaries. It further advised government to complement the NASSP with the National Home-Grown School Feeding Programme (NHGSFP) to strengthen the food security of vulnerable households in 26 states and rapidly implement the World Bank-supported CARES project to support households, farmers, and firms. The Fund also noted that the economy is expected to grow by 1.8 per cent in 2021, if there is rise in oil exports.
“Though there is high uncertainty about the outlook, the recovery would be driven by rise in oil exports and in domestic demand. However, Nigeria’s recovery is expected to underperform those of other oil producers, and an unexpected shock to oil prices could threaten the modest growth projected.