The International Monetary Fund
(IMF) has urged the President Goodluck Jonathan-led administration to remove
fuel subsidy completely, to ensure fiscal adjustment.
IMF’s Senior Resident Representative/Mission Chief, Williams
Scott Rogers, speaking with the media on Thursday, also insisted that Nigeria
requires public sector reforms, stressing that it was necessary for planned
savings in recurrent spending.
He also recommended that the Federal Government should mobilise
non-oil revenues and strengthen oil-price rule and oil savings mechanism, while
pushing for the maintenance of tight monetary policy.
Commenting on the Nigerian banking sector, Rogers gave a
pass mark, disclosing that it had improved considerably, as credit to the
private sector improved under fully capitalised banks.
Notwithstanding the improvement, the IMF Country Representative
advised that more work on consolidated and cross-border supervision should be
encouraged, stressing that there was an urgent need for structural reforms to
enhance productivity and global competitiveness.
“To this extent, power reform is a quick win for growth and
competitiveness,” he said, submitting that trade protection for
“infant-industries” should be strictly time-bound, while focus should be on
measures to improve competitiveness.
According to Rogers, export diversification was key to long-term
growth and improvement in macro-economic statistics, especially in national
income accounts.
On the declining oil price in the international market, Rogers
called for caution on the part of the Federal Government.
He disclosed that although international reserves had been rebuilt
and now stand at just over US$50 billion, a decline in international oil prices
to US$97 per barrel (annual average) can erode Excess Crude Account (ECA)
balances.
“A decline in international oil prices to $97 per barrel (annual
average) would begin to erode ECA balances. A fall to $80 - $85 would wipe out
ECA balances within a year,” it warned.
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