Nigeria’s Growth rate To Slump 5% In 2015 – IMF

Nigeria’s Growth rate To Slump 5% In 2015 – IMF

International Monetary Fund (IMF), yesterday, predicted that Nigeria’s gross domestic product (GDP) is expected to decline by five per cent in the year 2015, saying that the magnitude of the adverse oil price shock (projected at about 25 per cent for 2015) would sharply reduce fiscal revenues and limit fiscal spending.

However, a top official of the IMF, Mr Gene Leon, added that the overall impact on the non-oil sector GDP would be relatively muted because of limited direct channels from the oil sector.

Furthermore, Leon noted that the sector was expected to remain the main driver of growth over the medium-term.

He added that the depreciation of the exchange rate was expected to increase inflation, reflecting pass-through effects of higher domestic prices for imports. He, however, maintained that the effect was likely to be contained in part, owing to lower food prices from increased local production of staple food crops.

“Nigeria remains vulnerable to oil price volatility and global financial developments. The measures already taken by the authorities demonstrate their commitment to macroeconomic stability.

“However, fiscal and external buffers are low and there is less policy space for maneuvering, compared to the onset of the 2008-09 financial crisis – the Excess Crude Account (ECA) in 2008 was $21 billion compared to $3 billion now – while gross international reserves was $52 billion,” he said.

He said that the exigencies of public financial management apply equally to all tiers of government

“Although the focus has been on the response of the federal government, lower oil receipts, low internal generated revenues, and a constrained ability to reduce recurrent expenditure could have a significant impact on delivery of social services by state and local governments, suggest the need for robust risk management frameworks across all tiers of government,” he added.

“Rebuilding buffers, especially the ECA, is a necessity for addressing future shocks.

Source: Leadership News