Nigeria’s quest to secure a $1.4billion loan from the international
funding agencies may be hindered, if the country fails to buy-in to
reforms being pushed by the International Monetary Fund (IMF), a report
has indicated.
The IMF, Reuters said, is expected to warn Nigeria that its economy
needs urgent reform, saying a failure to imbibe the measures, could
delay talks over $1.4 billion in international loans.
The global
financial institution, is expected to warn Nigeria that its economy
needs urgent reform, according to a report seen by Reuters that could
delay talks over $1.4 billion in international loans.
The Washington-based fund will urge Nigeria, a major oil producer, to
introduce immediate changes to its exchange rate policy, saying the
nation’s recent reform plan is not enough to drag Nigeria’s economy out
of recession, the report, billed for release on March, 29, said.
“Much more needs to be done,” the IMF said in the document, written
after a final meeting between its representatives and top officials in
Abuja before the fund issues its verdict on Nigeria’s economy next week.
“Further actions are urgently needed,” it said.
The report – from the fund’s acting secretary and addressed to
members of its executive board – is set to form part of the IMF’s
verdict, although Nigeria can request alterations. Three people familiar
with the negotiations said it would send an important signal to
institutional lenders.
The World Bank has been in talks with Nigeria for a loan of at least
$1 billion for more than a year and the African Development Bank (AfDB)
has $400 million on offer, but discussions have stalled over economic
reforms.
Nigeria is seeking the funding for infrastructure investment
and to help plug an expected record deficit in this year’s budget as it
boosts spending to try to end a recession.
“The tone of the IMF will be critical in terms of signaling,” said
one of the people familiar with the negotiations, who spoke on condition
of anonymity because they were not authorised to speak to media.
Two of the people with knowledge of the loan talks said the lenders were unlikely to withhold funding entirely.
President Muhammadu Buhari has rejected a devaluation of the Naira
and backed curbs imposed by the Central Bank that force firms to buy
dollars needed for imports for a premium on the black market.
Nigeria has at least five exchange rates – the official one, a rate
for Muslim pilgrims travelling to Saudi Arabia, one for school fees
abroad and a retail rate set by licensed exchange bureaus.
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