World body slashes Nigeria's growth forecast

folarin okunola

April 4, 2016 11:47 AM

IMF officials had forecast 3.2 percent growth for Nigeria in 2016, following a visit to the country in February.

Visitors are silhouetted against the logo of the International Monetary Fund at the main venue for the IMF and World Bank annual meeting in Tokyo October 10, 2012.

Media reports reveal that the International Monetary Fund (IMF) has said that it has again cut its growth forecast for Nigeria as the country faces "substantial challenges" from low crude prices.

In the world body's annual review of Nigeria's economic situation, the IMF said that gross domestic product growth would slow to 2.3 percent in 2016 from an estimated 2.7 percent in 2015.

"Key risks to the outlook include lower oil prices, shortfalls in non-oil revenues, a further deterioration in finances of state and local Governments, deepening disruptions in private sector activity due to constraints on access to foreign exchange, and resurgence in security concerns," said the IMF, in a statement.

READ: Currency gains against Dollar, Pound, drops slightly against Euro [March 29, 2016]

It further added that general government deficit would grow further after it doubled to 3.7 percent of GDP in 2015.

The Fund said Africa's biggest economy needed to urgently implement policies to safeguard fiscal sustainability, reduce external imbalances and boost structural reforms that promote more inclusive growth.

"Directors emphasized the critical need to raise non-oil revenues to ensure fiscal sustainability while maintaining infrastructure and social spending. They urged a gradual increase in the VAT rate, further improvements in revenue administration, and a broadening of the tax base," it said.

Nigeria is currently in discussions with the World Bank on continuing a possible loan or credit facility that is tied to policy reforms in Nigeria, a spokesman for the Washington-based multilateral lender said on Thursday, according to media reports.

folarin okunola