Nigeria’s economy to shrink on Brexit, says IMF

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), speaks at the Federal Reserve Bank of New York.

Lagarde’s remarks focused on correspondent banking relationships following the global financial crisis. Drew Angerer briefs Senate on economy
From the International Monetary Fund (IMF) has come the not-so-cheery news that Britain’s exit from the European Union (EU) would have negative impact on some nations including Nigeria.

Accordingly, the IMF has projected that Nigeria’s economy is to shrink by -4.1 per cent growth this year, down from the earlier projection of 2.7 per cent, to berth at a negative growth rate average of -1.8 per cent.
Effectively, what the current updated global economic growth rate outlook released yesterday means is that Nigeria’s economy will be in full recession this year.
According to the IMF, which is the global economic policy advisory establishment, the new outlook also cuts Nigeria’s 2017 growth projection from the earlier 1.1 per cent to -2.4 per cent.
The new economic outlook is against the backdrop of the risk of the recent exit from the European Union by Britain.
Concerning the sub-Saharan African commodities-reliant countries, the IMF said: “The outlook for other emerging and developing economies remains diverse and broadly unchanged relative to April. That said, gains in the emerging group are matched by losses in low-income economies. Indeed, low-income countries saw a large downward revision in 2016, in large part driven by the economic contraction in Nigeria and also worsened outlook in South Africa, Angola and Gabon.

On Monday, Nigeria’s National Bureau of Statistics (NBS) released the June 2016 figures which revealed that the country recorded another negative growth result with inflation moving from 15.6 per cent the previous month to an 11-year high of 16.5 per cent, the increase being the fifth in the current fiscal year.
Meanwhile, there are fresh revelations that from the third quarter of last year, the Federal Government’s budgetary capital spending had declined, the worst in four years spanning 2012 to last year.
The consolidated 2015 Federal Government Budget Implementation Report just released by the Federal Ministry of Budget and National Planning revealed that both provisional allocation and implementation levels have dropped from a height of N1.004 trillion capital votes releases and actual implementation of N968.93 billion recorded in 2013 to just N387.39 billion releases with no information on the amount of cash backing or actual implementation in the 2015 fiscal plan out of the N557 billion provision for the year.

In the 2012 fiscal plan, N1.017 trillion out of the N1.339 trillion projected for capital budget implementation for the year was released to MDAs out of which N739.3 billion (or 72.66 per cent) was cash-backed while N686.3 billion (or 92.83 per cent) of the cash-backed sum was utilized by the government agencies.
In the same vein, in the 2014 plan, records indicate that N501.79 billion out of the N1.119 trillion projected for capital budget implementation for the year was released to MDAs. The sum of N501.72 billion (or 99.99 per cent) of the released amount was cash-backed while N490.92 billion (or 97.85 per cent) of the cash-backed sum was utilised as at the end of December 2014.
In a related development, the Central Bank of Nigeria (CBN) has briefed the Senate on critical issues in the economy.

At a closed-door session that lasted two hours, the governor of the apex bank, Godwin Emefiele, was said to have told the senators that steps were being taken to address the dwindling fortunes of the economy.
It was gathered that issues relating to increased taxation and tightening loose ends in the economy were canvassed.
Briefing journalists on the issues raised at the closed-door session, the Vice Chairman, Senate Committee on Media and Public Affairs, Ben Murray-Bruce, said the Finance Minister, Kemi Adeosun, would have to answer questions on issues raised by the CBN.
On the likely solution to the economic problem, he said: “For us to get out of this mess we have found ourselves in, we need to start buying Nigerian products and we need to stop importing products. We are in a mess already and everybody is part of it. But to solve this problem, we need to buy Nigerian products.”

When the lawmakers resumed plenary session, Senate President, Bukola Saraki, said: “The Senate, in a closed-door session with the CBN governor deliberated on the new foreign exchange, management policy and the determination of foreign exchange market by demand and supply mechanism. The need to continue to grow the economy, focus and diversification of the economy and issues relating to some of the commercial banks.”