The International Monetary Fund has advised the Nigerian government to lift the remaining foreign exchange restrictions and scrap the system of multiple exchange rates in order to relaunch the economy back to reckoning.
The report released on its website on Thursday was the result of a recent visit to the country by IMF officials.
In the report titled ‘IMF Executive Board concludes 2017 Article IV consultation with Nigeria’, the IMF noted that stronger macroeconomic policies were urgently needed to rebuild confidence and foster economic recovery in the country.
“Directors underscored that external adjustment is necessary to protect foreign currency buffers and reduce vulnerabilities. They commended the recent easing of some exchange restrictions and urged the authorities to remove the remaining restrictions and multiple currency practices, thus unifying the foreign exchange market and helping regain investor confidence.
“Directors emphasised that these policies should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations and to limit the risk of exchange rate overshooting, as well as structural reforms to improve competitiveness,” it read in part.
The Fund commended the Central Bank of Nigeria’s efforts to keep the country’s banks afloat, stating however that the issue of declining asset quality in the financial services industry must be urgently addressed.
It stated, “Directors welcomed the steps to strengthen banking sector’s resilience through stronger prudential requirements. With asset quality declining, they recommended further intensifying bank monitoring, enhancing contingency planning, and strengthening resolution frameworks.
“Directors encouraged quickly increasing the capital of undercapitalised banks and putting a time limit on regulatory forbearance.”
The IMF said it recognised that the Nigerian economy had been negatively impacted by low oil prices and production.
It commended the efforts already made by the Federal Government to reduce vulnerabilities and enhance resilience, including increasing fuel prices, raising the Monetary Policy Rate, and allowing the exchange rate to depreciate.
