A fundamental policy reset is needed for Nigeria to pull the economy away from the brink of collapse, the International Monetary Fund (IMF) said in its latest Article ice IV report.
Nigeria slipped into its worst recession in over three decades last year and now faces a record sixth straight year of declining average incomes with most forecasts pointing at less than 2 percent growth in 2021.
“The current crisis provides a unique opportunity to break away from the past,” the IMF said Monday.
A large number of countries around the world have been battered by the global pandemic, experiencing output contractions.
What set Nigeria apart are its weak pre-crisis fundamentals that threaten to turn a temporary crisis into a slump with more lasting consequences for employment and living standards.
Long-running inward-looking policies have been stepped up in recent years through increased import restrictions, a partial border closure, administrative control of foreign exchange (FX) allocation and capital flow measures (CFMs).
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But these protectionist measures are yet to deliver a job- rich growth as the economy remains heavily dependent on the oil sector, through direct and indirect exposures, and vulnerable to periodic commodity shocks.
Past IMF advice to pursue broad market reforms, including recommendations for unification and greater flexibility of the exchange rate that the authorities committed to under the RFI, have seen limited traction, the Fund observed.
This year’s IMF consultation focuses on near- and medium-term policies needed to alter Nigeria’s lack-luster economic course.
