By Olanrewaju Ajao President Muhammadu Buhari Tuesday told officials of the International Monetary Fund (IMF) that his administration will carry out a couple of fundamental reforms needed to revamp the economy.
President Buhari was speaking to IMF delegation led by Managing Director, Ms Christine Lagarde at the State House.
Buhari said that his administration will also enforce greater discipline, probity and accountability in all revenue generating agencies of the Federal Government.
“We have just come out of budget discussions after many weeks of taking into consideration the many needs of the country, and the down turn of the economy with falling oil prices and the negative economic forecasts.
“We are working very hard and with the budget as our way forward, we will do our best to ensure that our country survives the current economic downturn.
“We have also told all heads of Ministries, Departments and Agencies of government that on our watch, they will fully account for all funds that get into their coffers,” Buhari told Ms Lagarde.
He added that the Federal Government was reviewing its operational costs and had directed all the Ministries, Departments and Agencies to cut down on their overhead costs.
Buhari said his government will welcome the technical support and expertise of the IMF for its plans to diversify the Nigerian economy and further unleash its growth potentials.
Speaking to State House Correspondents after the meeting, Lagarde maintained that the country does not need its loans to survive despite its current economic situation brought about by dwindling price of crude oil at the international market.
She added that the the body has no intention of negotiating any new loan program with Nigeria.
The IMF boss equally cautioned that the government should not be rigid in its policy so as not to further impoverish the common man in the country.
“First let me make it clear that I’m not here nor is my team in this country to negotiate a loan with conditionalities. We are not into programme negotiations and frankly at this point in time, given the determination, resilience displayed by the President and his team, I don’t see why an IMF programme will be needed.
“So of course discipline is going to be needed, of course, implementation is going to be key for the objectives and the ambitions to serve the country well, in order for it to be actually sustainable.
On the current account upfront, we believe that with very clear primary ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if as we think, the price of oil is likely to be possibly low for longer, because clearly the authorities should not deplete the reserves of the
country, simply because of rules that will be exceedingly rigid. I’m not suggesting that rigidity be totally removed but some degree of flexility will be enough,” she cautioned.
The IMF boss also hinted that the body’s team of financial experts would be in the country to meet with the Finance Minister on the 2016 budget proposal with a view to ascertaining its implementation.
On what IMF team specifically discussed with Buhari, Lagarde said “We have excellent discussions with Buhari and we discussed the challenges ahead stemming from oil price reduction. The necessity to apply fiscal discipline and the need to also respond to the population needs while addressing the medium term specificities of improving the competitiveness of Nigeria and yet also focusing on the short term fiscal situation which requires that revenue sources be identified in
order to compensate the shortfall resulting from oil price decline.”
She continued “Oil is not the major contributor to the Nigerian GDP, it is only about
40 per cent but it is a big source of revenue for the government. We discussed with the President, Vice President and the Minister of Finance and Minister of Budget how more efficiency, more transparency, better accountability, the enlarging the base of revenue could actually contribute to sound budget going forward.
“It is not for me here and now to actually approve or comment on the budget because we have procedures in the IMF under which a team of Economists is going to come next week actually to do what we call the Article 4 which is
to review and have good discussion with partners, IMF on one hand, country’s
authorities on the other hand to really access whether financing is in place; whether the debt is sustainable; whether the borrowing cost are sensible and what strategy put in place in order to address challenges going forward.
“But what I certainly mentioned to Mr. President was that his fight and his determination to fight corruption and his determination to bring about transparency and accountability at all levels of the economy are very important agenda item and very ambitious goal that needed to be deliberated upon which he, himself is definitely committed to as he indicated this morning and as he inspires his team members.
With that I am going to have more discussions with the finance minister, with Governor of Central Bank. We will be discussing issue of fiscal discipline, financing monetary policies and the degree of flexibility, all that with the fact that Nigeria with a vibrant large economy still has to deal with poor people. A lot of inequality and
those two components should certainly be the drivers of reforms, whether it is looking at subsidies and how they are structured and how they can be phased out; whether it is monetary policy and the flexibility needed and knowing what effect it has on the poor. All of those are ambitions that we could quickly recognize and support
Our technical discussions will continue and to those of you who wonder why the IMF Director is visiting Nigeria. It is precisely to have good discussion about these new objectives, these reforms agenda that have been identified and supported by the President and also to appreciate the impact that it will have on neighbouring countries because when a country large as Nigeria, anything that it decides, any
hardship that it faces will have consequences around it and that is what our research and analytical work is demonstrating. Nigeria is one of those that have impact not just on itself and its people but around it and it’s neighbours.”
Reacting to the comment that IMF programs, judging with the country’s experience in the past, are never pro-poor Lagarde said “Certainly, the last four and a half years, since I have been Managing Director of this institution, this is not the recipes we adopted and this is certainly not the feedback I have received from the countries that we have worked with.
“I just want to point out that we are majorly involved in three kinds of activities.
The first one which is the most traditional one is under which we give policy advice to our members, we have currently 188 countries that are under this institution and it is our duty and accountability to them to review their economy every year to give them report about their economy. We don’t push them, we don’t do things necessarily to please them we say things as we see them.
“The second activity which is the fastest growing one in the institution is technical assistance and capacity building, and there is plenty of that is available to all the countries of the world. It gives us pride to see that about 150 countries have had the benefit of technical assistance and capacity building.
“We have discussed that with the minister of Finance together with their team and we would be happy to provide more technical assistance and capacity building. You need a strong tax department; you need a strong debt management; you need a strong custom authority in order to achieve a strong economy for the country.
“The third activity is the lending that we provide because nobody else is ready to provide lending for the country. When the balance is in a very bad situation and when there are no finances available, at that point in time in order to pull the country out of the very difficult situation it is in, we come in and we lend. But we do that because it is the entire international community’s monies. It is not my money, it
is the international community’s money and we do so with the right guarantees stepping into international community bonds, which is that the economy is going to be improved, that fiscal discipline is going to be brought in, that corruption is going to be punished. We don’t do as much now as we did four years ago because the situation has improved. As I said earlier on I am not here to negotiate a programme, at all.”
