THE Managing Director of the International Monetary Fund (IMF), Ms. Christine Lagarde, ended her recent visit to Nigeria on a most positive note. She was full of praise for the determination and resilience displayed by President Muhammadu Buhari and his team, and clearly affirmed that the country would not need an IMF loan.
HER views are good news to many Nigerians. It is heartening that the crystal ball of the IMF did not project doom and gloom on the Nigerian economy. Instead, Lagarde was uncharacteristically optimistic, if not charitable, in acknowledging that the Nigerian “economy is well diversified, no longer dominated by agriculture and oil,” with services accounting for almost half of GDP, including a significant home-grown film industry and “innovative startups from fashion to software development.”
President Buhari told Lagarde that the Federal Government would welcome the technical support and expertise of the IMF in its quest to diversify the economy, while she promised that the institution would help the government to plug revenue leakages, trace stolen funds and restructure its tax system.
We think the visit of Ms. Lagarde was significant for several reasons. The IMF’s certificate of health is- sued to an economy like Nigeria’s is almost inestimable in value. It tells the world that the country is open for business. Its analysis of the Nigerian economy is taken as a most credible and reliable reference point. Her complimenting Nigeria on its efforts to fight corruption will go a long way to alter international perception of Nigeria as among the most corrupt countries in the world. She was impressed by the decision of the government to publish monthly data on the finances and operations of the Nigerian National Petroleum Corporation (NNPC). She also advocated transparency and the rule of law as crucial in reducing constraints to the country’s economic growth.
We note the absence of the traditional apprehensions that accompany a visit by an IMF boss to a struggling economy like ours. The reason is that the government on its own has set in motion its own plans as different from an initiative handed down by the IMF.
Lagarde, to the government’s credit, only had to endorse much of the President’s plans. She did offer to help audit Nigeria’s 2016 budget to “assess whether the financing is in place”, if the debt is sustain- able, whether borrowing costs are sensible, and to suggest the way forward, if need be. We share her anxiety in these areas. Even if the financing is there and the debt is within bounds, it is still necessary for us to ensure that the borrowing costs are not back-breaking.
One seeming area of disagreement between Lagarde and the Buhari administration is her rec- ommendation that the government should adopt a “flexible exchange rate policy.” The government has resisted the pressure to permit such flexibility over fears of a free fall of the Naira, considering the continuing slide of crude oil prices in the international market.
The long-standing distrust of the IMF by developing countries has persisted and it is reassuring that this time, the IMF boss is not recommending strong medicines for Nigeria which often come in the form of austerity measures, reduction in social spending and drops in wages and standard of living, which lead to greater impoverishment of the ordinary citizens.
We urge the government to make the most of Lagarde’s offers on how to improve the competitiveness of the Nigerian economy, increase its revenue base and develop critical infrastructure, especially power, rail transportation, road networks and housing. The IMF can be re- ally helpful in international negotiations, and should be listened to when it talks about “poverty, inequality, and unemployment levels.” These are problems which we have been incapable of tackling in recent years. They now constitute a time bomb and the Buhari government will do well to address them expeditiously in the best interest of the people.