IMF cuts Nigeria’s growth projection to 2.9 percent

Jonas Ezieke, Abuja and By AKOR SYLVESTER-Abuja

 

The International Monetary Fund (IMF) has cut Nigeria’s growth forecast from 3.3 per cent to 2.9 percent in 2023 and 3.1 in 2024 respectively, with negative effects of high inflation on consumption taking hold.
This is contained in the World Economic Outlook released at the Annual Meeting of the IMF/World in Marrakesh, Morocco earlier Tuesday.
The growth forecast for 2023 is revised downward by 0.3 percentage points, reflecting weaker oil and gas production than expected, partially due to maintenance work.
The World Bank had cut Nigeria’s 2022 growth forecast to 3.1% from a previous forecast of 3.8% in 2022.
In its last Nigeria Development Update (NDU), launched in Abuja, the bank said that the nation had to make hard choices or face a worse economic downturn in the months and years ahead.
Since the swearing in of President Bola Tinubu on May 29, he has removed fuel subsidy and floated the exchange rate in line with the age-long recommendation of the IMF and World Bank.
A development that has seen the rate tumble to over N1000 to the dollar, and the energy prices increase by four folds from N144 to N620, impacting an already worsening inflation scenario
The baseline forecast is for global growth to slow from 3.5 per cent in 2022 to 3.0 per cent in 2023 and 2.9 per cent in 2024, well below the historical (2000–19) average of 3.8 per cent.
Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite.
Emerging market and developing economies are projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024.
Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices.

.As Reps urge CBN to address negative impact of falling naira against dollar

Meanwhile,The House of Representatives on Tuesday urged the Central Bank of Nigeria CBN to implement monetary policy adjustments to stabilise the nation’s currency, address speculative activities in the forex market, and increase the withdrawal limit of the naira to reduce the pressure on dollars and other foreign currencies.

 

The House also also urged the Federal Government of Nigeria to formulate policies and structural reforms to reduce corruption and promote economic diversification within the nation’s economy.

 

This was sequel to the adoption of a motion by Hon. Ismaila Haruna-Dabo from Bauchi State on the matter on the floor of the House at plenary.

 

The lawmaker observed that 90% of Nigeria’s total export earnings are from oil, but changes in the price of oil around the world have a big impact on the country’s foreign exchange market, which explains why the naira has continued to depreciate.

 

According to him, depreciating naira makes imported goods more

expensive, leading to higher inflation rates.

 

This increased cost of living he said disproportionately affects the

most vulnerable citizens, as they struggle to afford basic necessities, which are now glaring across the

country.

 

“Nigeria’s foreign exchange inflows are lagging despite unification in June, with high demand for foreign currency and limited access to official markets incentivising black market purchases, the naira has lost a greater percent of its value against the dollar, falling from N778.602/$ as of September 26, september 2023, and nearly N1000/$ at the parallel market, making it the first time Nigeria has lliberalised the foreign exchange market.

 

Hon Haruna-Dabo added that foreign investors may be deterred from

investing in Nigeria, fearing potential currency losses, which is capable of stunting economic growth and hindering the creation of new job opportunities for unemployed Nigerian youth.

 

He stated that a weaker and depreciating Naira could increase Nigeria’s external debt servicing costs, potentially reducing government spending on critical sectors like healthcare and education.

 

The lawmaker said the Central Bank of Nigeria (CBN) frequently uses its foreign reserves to stabilise the

naira, but that this can deplete its reserves, making the country vulnerable to economic shocks.

 

Adopting the motion, the House presided over by the Deputy Speaker Hon Benjamin Kalu called on the federal government to promote exportation and reduce importation by

enhancing foreign investors’ confidence on its Fiscal and Monetary Policies.

 

It mandated the Committees on Banking Regulations and National Security and Intelligence to

interface with the CBN with the purpose of initiating compliance strategies.

 

The House also mandated its Committee on Banking Regulations to investigate the use of US Dollar sand other foreign currencies as legal tender for domestic transactions in Nigeria.

 

.Nigerians suffering under Tinubu’s floating naira, oil subsidy removal — PENGASSAN

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has decried the recent policy direction by the government of President Bola Tinubu, saying that it has placed hardship on Nigerians.

President of PENGASSAN, Festus Osifo who spoke at the ongoing PENGASSAN Energy and Labour Summit (PEALS) in Abuja, said the chief of the policy direction such as the removal of fuel subsidy and the floating of the naira-dollar exchange rate have affected the people in many ways, as they continue to suffer in their daily living.

According to him “the overarching impart of this on Nigerians can only be imagined rather than experienced. Part of the decisions of floatation has only benefited the government and the oil and gas companies in Nigeria”.

The PENGASSAN boss further noted that “the model practiced in Angola, where legislation pegs worker’s salaries in dollars and pays the the legal tender equivalent, is a testament to the possibilities of safeguarding the interests of workers amadst currency fluctuations.

” The floating of the naira in the official market has exacerbated the challenges faced by our members. We must explore innovative solutions to forestall financial losses to workers and prevent undue gains to companies, ensuring a fair and equitable environment for all.

“PENGASSAN will do all it can to push for this just and equitable distribution across it’s branches”,.

He earlier stated that the country was witnessing a significant shift in the landscape of the energy sector, marked by the divestment octions of companies such as Mobil Producing Nigeria, Nigeria Agip Company, SPDC, and others, which he said has impacted the presence of International oil and gas companies in Nigeria.

The PENGASSAN President said the developments necessitated a collective reflection on the implications for industry, nation and people.

On his part, the former president of PENGASSAN, Peter Esele said wage award or increase for workers in Nigeria is not a solution to the the hardship slammed on Nigerians with the removal of fuel subsidy.

He posited. as one of the penalists at the event that the workers occupy the small, if not the smallest portion of Nigerian population, and therefore, wage award as announced, is not penacea or a solution to the problem.

Esele said there are large numbers of Nigerians that are not federal workers, maintaining that efforts should be channels to developing health, education, transportation and others, if government is to better the lots of the people.