Washington — Not withstanding the insecurity in the northern part of Nigeria and crude oil theft, which has negatively affected the nation's revenue base, the International Monetary Fund (IMF) has rated the nation's economy as still strong.
The IMF's positive rating came only a day after the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, restated that Nigeria was not broke.
The minister's defence was amid criticisms and claims that the country was broke. The IMF, therefore, projected a real Gross Domestic Product (GDP) growth of 7.4 per cent for Nigeria in 2014, which is higher than its 6.2 per cent projection for the economy last year.
The Bretton Woods institution disclosed this in its World Economic Outlook (WEO) launched yesterday in Washington DC as part of the pre-meetings events of the 2013 IMF/World Bank annual meetings.
The IMF explained that higher oil prices at the international market showed strong economic prospects for Nigeria despite the aforementioned challenges the country was facing.
"In Nigeria, still high oil prices underpinned strong growth, notwithstanding temporary downdrafts from security problems in the north and oil theft," it said.
Also, the IMF noted that growth in sub-Saharan Africa was robust between 2012 and 2013 and was expected to accelerate somewhat in 2014, reflecting strong domestic demand in most of the region.
It added: "Nevertheless, spillover from sluggish external demand, reversal of capital flows, and declines in commodity prices are contributing to somewhat weaker growth prospects in many countries relative to the April 2013 WEO. Policies should aim to rebuild room for policy manoeuvring where it has been eroded, and more broadly to mobilise revenue to address social and investment needs."
In order to achieve sustainable and inclusive growth in the medium term, the IMF urged policy makers in African countries to deepen structural reforms and give priority to infrastructure investment and social spending.
"Activity in sub-Saharan Africa remained strong in the beginning of 2013, although marginally down from 2012, supported in most countries by domestic demand. Growth was particularly strong in low-income and fragile states, with the notable exceptions of Mali and Guinea-Bissau, which were affected by internal civil conflicts.
"Angola benefited from a recovery in oil production. In Ethiopia, declining coffee prices and supply bottlenecks slowed growth slightly from a very high level. However, South Africa's growth slowed further, in large part due to tense industrial relations, anaemic private investment, and weaker consumption growth, the latter affected by slowing disposable income growth and weakening consumer confidence.
"With a few exceptions, inflation remained broadly stable in the region. Recent global financial market volatility has affected several economies in the region, although most low-income countries experienced little impact given their limited links with global financial markets. Among frontier markets, Nigeria's currency weakened against the U.S. dollar at the peak of the volatility, although financial conditions have since stabilised," it further explained.