The International Monetary Fund, IMF, yesterday, called on the Federal Government to implement timely policy actions to avert risk of oil price shock and reversal of foreign capital inflow looming over the country and others in the sub-Saharan Africa region.
IMF Director, African Department, Antoinette Sayeh made this call in Lagos at the presentation of the Africa Regional Economic Outlook for the region.
But Deputy Governor, Economic Policy Central Bank of Nigeria, CBN, Mrs Sarah Alade, said that the CBN is aware of these risks and has put in place a framework to mitigate them.
In a presentation entitled, “Sub-Saharan Africa: Keeping the Pace”, Sayeh identified the risks to the growth of the Nigerian economy as commodity price risk and the reversal of foreign capital inflows. She said these risks have increased not only in Nigeria but in the Sub-Saharan region significantly over the years.
“Looking forward, fiscal consolidation is expected to be strengthened in Nigeria with more moderate oil price projections. As a result, fiscal balance for 2013 and 2014 in Nigeria is projected to remain around 1.8 per cent of GDP, almost the same as in 2012.
“In Nigeria, government expenditure reached a cyclical maximum.
The risk of debt distress in many countries in our view remains low.
“Without significant policy measures, a prolonged negative oil price shock or a permanent real GDP growth shock could undermine the recent progress that had been made in achieving macroeconomic stability.
Given Nigeria’s strong position, it is important for the country to take timely policy actions to be able to avert future sustainability problems that can arise from such shocks.
“Portfolio flows have gained attraction in some countries and mostly in Nigeria. Foreign Direct Investment, FDI, in Nigeria in 2013 and 2014 are expected to remain relatively unchanged.”