Omoh Gabriel
25 August 2008
The Federal Government's talks with the International Monetary Fund (IMF) to develop a new (Policy Support Instrument) economic policy package for the country has reached an advanced stage.
The Policy Support Instrument is to act as a guide, framework and monitor implementation of government economic programme to enable Nigeria maintain prudence in spending to ensure a stable macro economic environment.
Government sources said the Policy Support programme being worked upon would embody the Yar'Adua 7-point agenda, the 2020 economic vision of the President into the NEEDS 2 document.
The policy being worked upon, it was learnt, has three basic principles - empowering Nigerians, encouraging the private sector to lead the economy and changing the way government does business.
Discussions are said to be focussed on how to integrate these programmes into one acceptable document with the targets of reducing poverty in the country and meeting the millennium development goals.
Although government functionaries are keeping the progress of the discussions so far under wraps, those close to the discussion said the technicality of developing the framework had been discussed between the Resident Representative of IMF, Michael Bell, Ministry of Finance and CBN officials while top government functionaries who make up the economic team of the present administration and that government has agreed that the IMF should monitor the country's economic programme to ensure proper implementation.
According to Ministry of Finance officials, high level talks have been held and will be concluded with the IMF at the forthcoming IMF/World Bank Annual Meeting in Washington in October where a position will be taken by the Fund.
Confirming the ongoing discussions with the IMF for a second Policy Support Instrument recently in Lagos, Minister of Finance, Dr. Shamsudeen Usman, said the talks with the IMF were not to take the dreaded loans and its attendant conditionality but to guide, monitor and advise government. He said the last four years of Obasanjo's administration was guided by the policy support instrument.
According to the IMF, Nigeria's first policy support instrument was based on the National Economic Empowerment and Development Strategy (NEEDS), Nigeria's Poverty Reduction Strategy, and focuses on rapid and sustainable non-oil growth and poverty reduction.
There were speculations that government was about dropping NEEDS but government had come out to deny the speculations.
The earlier PSI which was approved by the IMF in October 2005 and lapsed in 2007 assisted Nigeria to develop a well-articulated and sound policy framework, including prudent macroeconomic policies, a strengthening of institutions, and ensure a governance structure conducive to private sector activity.
Approval of a PSI for Nigeria at the time, the IMF said signified the multilateral institution's endorsement of the policies outlined in the NEEDS document.
The IMF's framework for PSIs is designed for low income countries that may not need or want IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies. PSIs are voluntary and demand-driven.
PSI-supported programmes are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in a Poverty Reduction Strategy Paper (PRSP).
This is intended to ensure that PSI-supported programmes are consistent with a comprehensive framework for macroeconomic, structural and social policies to foster growth and reduce poverty.
Members' performance under a PSI is normally reviewed semi-annually, irrespective of the status of the programme.
The Minister of State for Finance, Remi Babalola, recently in Abuja at a conference on financing the 7-point agenda through the capital market said government will soon make public a successor programme to the PSI.
The Resident Representative of IMF, Michael Bell, recently said: "The PSI supported Nigeria's homegrown policies that were first articulated in the Nigerian Economic Empowerment and Development Strategy (NEEDS).
"After the expiry of the first two-year Policy Support Instrument (PSI) in October 2007, the Nigerian authorities indicated that they were considering a successor programme supported by the IMF.
"We understand that is still their intention and preliminary discussions with IMF staff are continuing.
The IMF stands ready to support Nigeria in any way the authorities find helpful. Any successor programme supported by the IMF would similarly be based on the authorities' policies as articulated in their policy strategy, including the seven-point agenda, NEEDS, and the national development plan."
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I thought that Shamsudeen said a few months ago that Nigeria no longer need PSI so Nigeria can go on its own. I was afraid these novice will run the fine economic policies of OBJ (that broght us BB+ Fitch/S&P ratings) to the ground again like they did thru 1999 before the advent of OBJ. Will y'all make up your mind? Grow of decline? - we know where your talent can lead us...to hell, as usual.