29 April 2012

Nigeria: World Bank/IMF Spring Meetings and Govt

The IMF/World Bank spring meetings have come and gone with various issues discussed in the annual spring meetings.

The issue before the spring meetings was the election of the World Bank president where Nigeria's coordinating minister for the economy Mrs Ngozi Ikonjo -Iwella bided for the presidency.

Even though she lost the elections she has made a statement and all the developing countries who threw their back behind her ambition feel the developing countries have made a statementt with her presidency. What can Africa and Nigeria in particular gain from this year's spring meetings?

IMF Managing Director Christine Lagarde said in the meetings that african hopes for broader progress face challenges too, with several potential shocks that could affect the continent and that her next fund-raising priority was the topping up of the IMF's resources that finance low-interest loans to low-income countries.

She noted that the IMF forecasts growth for the whole of Africa of about 4 percent for 2012 and 2013, with the continent's low-income countries are expected to grow by about 5 percent for the same periods. Lagarde noted that the group had discussed potential shocks that could affect African economies, including higher oil prices and more volatile commodity prices, and any resurgence of the euro area crisis. Those shocks would clearly slow growth, cool demand, cut aid, and reduce remittances.

"We concluded that those countries that have sufficient reserves and fiscal space should be able to ease macroeconomic policies to support demand. For other countries that do not have such fiscal room to maneuver, they will have to strengthen their positions and seek external funding if necessary,

On how the IMF can further help African countries, Lagarde said she is also pushing on fund-raising-following IMF members' pledges of more than $430 billion to boost the institution's total lending power-to replenish the Poverty Reduction and Growth Trust.

The trust provides resources to finance IMF low-interest loans to low-income countries. Members had agreed to use some of the profits from recent gold sales to put into that trust and now must complete the process.

"We need more money in that trust if we want to finance concessional loans for low-income countries," Lagarde stated. "So that will be my goal for the next few months: make sure that we replenish it; that there are more contributors and more dollars.

We have had indications that some countries are considering, which is good."

But according to the Nigeria's minister of finance the 6.6 per cent economy projected for Nigeria in 2013 was exceptionally good considering the global economy trend.

They obviously have their own projections, we also have our own, where we are aiming for 7 to 8 per cent growth of the economy for 2012 but let me say that 6.6 per cent growth in this current environment is regarded exceptionally good on certain international environment on which we are in now.So you should know that the projections of the world growth about 3.5 per cent done by the IMF, so if we are growing at even 6.6 it's something that we need to be quite proud of..very few countries are not doing that well except China and Indian.

So she said a way out of Nigeria is to diversify the nation's economy to ensure the country depends less on crude oil as its major revenue earner said that government would continue to double its effort in diversifying the economy through structural reforms.

She said that government will continue to monitor developments in the global economy and work hard to ensure that the economy was strengthened to have inclusive growth.Aslo adding his voice to the debate CBN governor Mallam Lamido Sanusi said that a lot depends on how quickly the growth drivers came into play to boost the economy.

"We already have fiscal consolidation, we have macroeconomic stability; what is left is to make progress on power and agriculture reforms.

"Once we are able to make that progress and there is an increase in electricity generation and an improvement on contract productivity, I don't think that these 7 to 8 per cent that has been forecast by the finance minister will be unachievable."

He noted that, all things being equal, the nation's economy may exceed the growth forecast of the minister.

On the issue of safety nets which was one of the issues discussed at the spring meetings, Social safety nets, or "socioeconomic safety nets", are non-contributory transfer programs seeking to prevent the poor or those vulnerable to shocks and poverty from falling below a certain poverty level. ) Dr Oby Ezekwesili, World Bank Vice President for Africa said Social safety nets are taking off across Africa, where more than 120 cash transfer programs have been set up in the last 10 years and There is growing evidence that they significantly help to reduce poverty.

Nigeria can key into this to reduce the rate of poverty in the country as most Nigerians live on less than one dollar a day. The rate of unemployment and poverty has been attributed to the rise of social vices in the country.

The rise of militancy in the south -south, kidnapping in the south east and the Boko Haram menace in the North. Nigeria can borrow a leaf from the Rwandan government where the government of the country has attributed rapidly falling poverty between 2006 and 2011 partly to the vision 2020 Umurenge programme of public works and cash transfer

On his part Mallam Sanusi Lamido alongside other African Central Bank governors have called on the International Monetary Fund (IMF) to continue to assist African economies needing balance of payments support with appropriate levels of financing, using the most appropriate instrument from the Fund's expanded lending toolkit.

The governors of the region also called on the IMF to use the windfall profits from the sale of gold to provide adequate resources to subsidise loans from the Poverty Reduction and Growth Trust to low-income countries while they emphasised the need for the global financial agency to promote and disseminate research and analytical tools tailored to African countries' circumstances and to adapt its advice and programme design to help African economies meet their needs in the challenging global environment.

Lamido Sanusi and his co-African policymakers also agreed that, if growth remained robust, policies should focus on strengthening the macroeconomic space.

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