There were indications that the 2016 Appropriation Bill may be subjected to further scrutiny and amendments by the International Monetary Fund, IMF, despite being already presented to the National Assembly for legislative action.
Managing Director of IMF, Ms Christine Lagarde, who is visiting Nigeria, told newsmen in Abuja, yesterday, that the multilateral financial institution would be discussing the budget next week with Nigerian officials.
Lagarde responding to question on the 2016 budget said: “A team of economists is going to come here (Nigeria) next week to review and audit (the bill) and have a good discussion with the government authorities to really assess whether the financing is in place, whether the debt is sustainable, whether the borrowing costs are sensible and what strategy must be put in place in order to address challenges going forward.”
The IMF boss, who held meetings with the Central Bank of Nigeria, CBN; Finance Minister, Mrs. Kemi Adeosun, as well as a closed door sessions with President Muhammadu Buhari and Vice President Yemi Osinbajo, had refused to comment directly on the content of the 2016 Appropriation Bill because there are procedures at the IMF that must be followed.
She noted that she will continue to have discussions with Nigeria’s Finance Minister and CBN Governor on issues of fiscal discipline, financing, monetary policies and the degree of flexibility, because despite “Nigeria being a vibrant and large economy still has to deal with a lot of poor people with a lot of inequality. Those two components should certainly always be the drivers of reforms, whether it is looking at subsidies, how they are structured and how they can be faced out.”
Don’t strangulate poor Nigerians
Following the dwindling oil prices that have apparently affected the national income of most countries, the IMF boss warned the Federal Government not to strangulate poor Nigerians with rigid economic policies.
She also stated that it was concerned by the condition of teeming population of poor Nigerians who would be affected by the rigidity of policies, stressing the need to inject fiscal discipline in the policy formulations.
According to Lagarde, her mission to Nigeria was not connected to the negotiations of any loan with any kind of conditionalities but to have discussion on the economic reforms and objectives of the present government.
A lot has changed in Nigeria
Recalling the tremendous progress Nigeria has made in its democratic process, Lagarde said a lot had changed in the country since she last visited four years ago.
She said: “I was in Nigeria four years ago and in four years, many things have changed. That has been the topic of our discussions with President Buhari and his team. Looking back four years ago, massive democratic change has occurred in this country peacefully. Nigeria has become the largest economy in Africa, certainly the most populated and with a very attractive market.
“But things have changed in a more complicated way in the sense that the source of revenue to the government of Nigeria which was predominantly oil has seen its price divided by more than half and the financing cost around are beginning to rise if only because the economic situation in the United States has improved and interest rates will begin to rise. Added to which emerging countries economies are decelerating their growth.
Not here to negotiate loan
“First, let me make it clear that I’m not here nor is my team in this country to negotiate a loan with conditionalities. We are not into programme negotiations and frankly at this point in time, given the determination, resilience displayed by the President and his team, I don’t see why an IMF programme will be needed. So, of course, discipline is going to be needed, of course, implementation is going to be key for the objectives and the ambitions to serve the country well, in order for it to be actually sustainable.
“We believe that with very clear primary ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if as we think, the price of oil is likely to be possibly low for longer, because clearly the authorities should not deplete the reserves of the country, simply because of rules that will be exceedingly rigid. I’m not suggesting that but that rigidity be totally removed but some degree of flexibility will be enough.
“We have excellent discussions with Buhari and we discussed the challenges ahead stemming from oil price reduction. The necessity to apply fiscal discipline and the need to also respond to the population needs while addressing the Medium Term specifics of improving the competitiveness of Nigeria and yet also focusing on the short term fiscal situation which requires that revenue sources be identified in order to compensate the shortfall resulting from oil price decline.
“Oil is not the major contributor to the Nigerian GDP, it is only about 40 per cent but it is a big source of revenue for the government.
To discuss budget next week
“We discussed with the President, Vice President and the Minister of Finance and Minister of Budget how more efficiency, more transparency, better accountability, enlarging the base of revenue could actually contribute to sound budget going forward.
“It is not for me here and now to actually approve or comment on the budget because we have procedures in the IMF under which a team of economists is going to come next week actually to do what we call the Article 4 which is to review….good discussion with partners, IMF on one hand, country’s authorities on the other hand to really access whether financing is in place, whether the debt is sustainable, whether the borrowing cost are sensible and what strategy put in place in order to address challenges going forward.
On war against corruption
“But what I certainly mentioned to Mr. President was that his fight and his determination to fight corruption and his determination to bring about transparency and accountability at all levels of the economy are very important agenda item and very ambitious goal that needed to be deliberated upon which he, himself is definitely committed to as he indicated this morning and as he inspires his team members.
“With that I am going to have more discussions with the finance minister, with Governor of Central Bank. We will be discussing issue of fiscal discipline, financing monetary policies and the degree of flexibility, all that with the fact that Nigeria with a vibrant large economy still has to deal with poor people, a lot of inequality and those two components should certainly be the drivers of reforms, whether it is looking at subsidies and how they are structured and how they can be phased out, whether it is monetary policy and the flexibility needed and knowing what effect it has on the poor, all, of those are ambitions that we could quickly recognize and support.”
IMF backs Buhari’s war against corruption
The IMF MD, who was flanked by the Minister of Finance, Mrs Kemi Adeosun, at the beefing also lauded the anti-corruption fight of President Buhari, saying that the course would engender the needed transparency and accountability in the financial system of the country.
“But what I certainly mentioned to Mr. President was that his fight and his determination to fight corruption and his determination to bring about transparency and accountability at all levels of the economy are very important agenda item and very ambitious goal that needed to be deliberated upon which he, himself is definitely committed to as he indicated this morning and as he inspires his team members,” she said.
Ministers’ll give accounts of funds —Buhari
Meanwhile, President Buhari has said that his ministers will render accurate account of every kobo they spent in their respective ministries.
He also said that his administration will enforce regulations to stop financial leakages and adopt global best practices in generating more revenue to mitigate the effect of dwindling oil prices on the Nigerian economy.
The president, who gave the assurance when he received the IMF boss at the Presidential Villa said that his administration will enforce greater discipline, probity and accountability in all revenue generating agencies of the Federal Government.
He said: “We have just come out of budget discussions after many weeks of taking into consideration the many needs of the country, and the down turn of the economy with falling oil prices and the negative economic forecasts.
“We are working very hard and with the budget as our way forward, we will do our best to ensure that our country survives the current economic downturn.
“We have also told all heads of Ministries, Departments and Agencies of government that on our watch, they will fully account for all funds that get into their coffers.”