- In the recently released statement based on IMF’s Executive Board 2021 Article IV Consultation with Nigeria, IMF has indicated that Nigeria’s ratification of the African Continental Free Trade Agreement could give a strong boost to the non-oil sector.
- The sector could also derive strength from the recent growth momentum in the economy, higher production from the new Dangote Refinery, and supportive credit policies.
- The oil production is also expected to rebound, supported by the more generous terms of the Petroleum Industry Act.
In the recently released statement based on IMF’s Executive Board 2021 Article IV Consultation with Nigeria, IMF has indicated that Nigeria’s ratification of the African Continental Free Trade Agreement could give a strong boost to the non-oil sector. The sector could also derive strength from the recent growth momentum in the economy, higher production from the new Dangote Refinery, and supportive credit policies. The oil production is also expected to rebound, supported by the more generous terms of the Petroleum Industry Act.
The IMF noted that Nigeria has come out of the recession in the fourth quarter of 2020.For 2021, it projected a 3% growth. The headline inflation, attributed to Pandemic, reached a peak of 18.2 per cent year-on-year (y-o-y) in March 2021, but declined to 15.6 per cent in December while the output rose by 4.1 per cent (y-o-y) in the third quarter. The output was driven by the new harvest season and opening of land borders. The employment according to the IMF is back at its pre-pandemic level. Though the oil prices recovered, the general government fiscal deficit is projected to widen in 2021 to 5.9 per cent of GDP, driven by fuel subsidies and higher security spending, the Fund said. It pointed out that the consolidated government revenue-to-GDP ratio at 7.5 per cent remained among the lowest in the world.
The current account showed improvement in 2021, supported by the IMF’s SDR allocation and Eurobond placements in September 2021the gross Foreign exchange reserves also showed improvement. IMF underlined the critical need for fiscal consolidation to create policy space and reduce debt sustainability risks and urged for significant domestic revenue mobilisation.
