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IMF expects Nigeria’s economy to meet 2024 grow target with stronger reforms

Published

3 weeks ago

August 29, 2024

The International Monetary Fund (IMF) says stronger reforms are needed for Nigeria to reach its goal of 3.1% economic growth in 2024.

The IMF’s Resident Representative, Dr Christian Ebeke, said this at the “Invest Nigeria” themed International Business Conference and Expo 2024 held by the Lagos Chamber of Commerce and Industry (LCCI) on Tuesday in Lagos.

Ebeke said that the country needed more changes to its laws and rules about running a business to grow a little faster than the 2.9% rate seen in 2023.

He said that these kinds of measures would change the country’s growth rate into something more stable. But he did say that the country had made progress in its loan market, as well as in its financial and international areas.

“Insecurity, tight financial conditions, multiple taxes, insufficient power and corruption are foremost constraints identified by businesses.

“What comforts the IMF is that the Nigerian government can address these issues, and they are currently being addressed through reforms by the Federal Government.

“And we are encouraged by the fact that these issues can be reversed,” he said.

He said that Nigeria should close the structural gaps like India does by removing 25% of the problems with government and company rules.

In the next three years, the Gross Domestic Product (GDP) could grow by 6.4% if that is done, according to him.

Adegboyega Oyetola, who is the Minister of Marine and Blue Economy, said that Nigeria’s location and wealth of resources made it a great place to invest, especially in the marine and blue economy fields. Even though there were problems, Oyetola said that the government was committed to making the right conditions for economic growth so that big capital would come in.

He talked about some of the ways the government is trying to get people to invest in the marine and blue economy sector. For example, businesses that operate in free trade zones don’t have to pay taxes, and they get help with building infrastructure.

He said that the government had given the marine sector new ways to sell through the African Continental Free Trade Area’s Guided Trade Initiative (GTI) and the Cabotage Vessel Financing Fund (CVFF), among other things.

“Our commitment to the marine and blue economy is demonstrated through ongoing port rehabilitation and modernisation projects. To boost investment, the Nigerian government has introduced a wide range of incentives, including tax reliefs, trade zone benefits, infrastructure development, and financial support. I encourage the business community and investors to take advantage of such incentives to contribute to Nigeria’s economic development and be part of Africa’s promising future,” he said.

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Nigeria’s central bank issues fresh guidelines for ‘Ways and Means’ to govt

Published

11 hours ago

September 18, 2024

Ifeoluwa Dada

The Central Bank of Nigeria (CBN) has issued new guidelines on Ways and Means which limit Ways and Means Advances to the federal government to 5% of the previous year’s revenue collection.

The apex bank made the position known in its fiscal year 2024-2025 monetary, credit, international trade, and exchange policy guidelines.

“Ways and Means Advances shall continue to be available to the Federal Government to finance deficits in its budgetary operations to a maximum of 5.0 per cent of the previous year’s actual collected revenue. Such advances shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted,” it said.

The Treasury Single Consideration (TSA) system requires these advances to take into consideration Ministries, Departments, and Agencies (MDAs) sub-accounts, which are linked to the Consolidated Revenue Fund.

The federal government’s consolidated cash situation will be more precisely reported, improving public financial management openness and resource availability. The CBN also stated that Ways and Means Advances must be repaid by the end of the fiscal year they were awarded, encouraging short-term borrowing.

In the Nigerian context, “ways and means” refers to the Federal Government’s ability to borrow money from the Central Bank of Nigeria (CBN). This means that the government may use “ways and means” to meet short-term needs or emergencies, which is why the CBN is referred to as the “lender of last resort.”

Over the past seven years, the facility had grown 2,900% to an extraordinary N23.7 trillion by 2023. This fast surge, which exceeded legal restrictions, increased inflation and Nigeria’s debt.

The CBN Act allows the bank to grant temporary advances to the federal government for budget revenue deficits at a rate deemed appropriate, but the total amount of such advances “shall not at any time exceed 5% of the previous year’s actual revenue of the Federal Government.”

In addition, it stipulates that “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”

The Senate and House recently enacted a bill to increase the CBN’s federal Ways and Means borrowing ceiling. The upper chamber of Nigeria’s legislature boosted the central bank’s loan capacity to the federal government from 5% to 10% of annual income.

Yemi Cardoso, CBN governor, announced earlier this year that the bank would stop making Ways and Means advances to the federal government until existing loans were returned. He said this is one of the bank’s key strategies to handle the country’s economic issues.

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Kenya, IMF discuss economic and fiscal issues

Published

17 hours ago

September 18, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) said on Tuesday that it had had productive discussions with Kenya’s government on its economic and fiscal goals after widespread protests prompted it to shelve tax rises.

In June, President William Ruto abandoned this year’s finance bill, leaving the deeply indebted government with a larger budget deficit, unpaid payments, and a delay in IMF funding.

“We remain fully committed to supporting the authorities in their efforts to identify a set of policies that could support the completion of the reviews under the ongoing program as soon as feasible,” the IMF said in a statement.

Kenya signed a four-year IMF loan in 2021 and another for climate change measures in May 2023, totalling $3.6 billion. The country secured a staff-level agreement with the IMF on its seventh review in June, but the protest and finance bill withdrawal delayed the executive board’s sign-off and payout.

Public debt helps development. Governments utilise it to fund spending, protect and invest in their citizens, and improve their futures. However, too quick governmental debt growth can be a burden. The developing world which Africa forms core is experiencing this.

Kenya’s government debt was 70.10% of GDP in 2023. Kenya’s government debt to GDP averaged 56.36% from 1998 to 2023, peaking at 78.30% in 2000 and falling to 38.20% in 2012.