Nigeria’s economy can emerge stronger from the present economic challenges if the country builds a strong tax institution, apply good debt management and strong customs.
These are the tripod upon which the Nigerian economy may be revamped, according to visiting IMF Managing Director, Christine Lagarde, who met members of the economic team yesterday at the Presidential Villa in Abuja.
“You need a strong tax department, you need a strong debt management, you need a strong customs authority in order to achieve a strong economy for the country,” said Lagarde, who is on a four-day visit.
Lagarde, while briefing State House correspondents shortly after the meeting, said her visit to Nigeria has nothing to do with programme negotiations with the Muhammadu Buhari-led government, but to see how the country can be put on the right footing in the face of current economic challenges.
There have been reports that the IMF boss’ discussion in the four-day visit to Nigeria would centre on economic issues concerning the nation, including the devaluation of the naira, borrowing and the vexed matter of oil subsidy.
Responding to questions on borrowing with conditionalities, devaluation of the naira and the deregulation of the oil sector, Lagarde stressed that the IMF team is not in the country for programme negotiations.
Although she did not dwell upon the issues of naira devaluation and oil subsidy removal, the IMF boss said she is not in Nigeria to negotiate a loan with conditionalities.
Her words: “First, let me make it clear that I’m not here nor is my team in this country to negotiate a loan with conditionalities. We are not into programme negotiations and frankly at this point in time, given the determination, resilience displayed by the President and his team, I don’t see why an IMF programme will be needed. So of course, discipline is going to be needed, of course, implementation is going to be key for the objectives and the ambitions to serve the country well, in order for it to be actually sustainable.
“On the current account upfront, we believe that with very clear primary ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if as we think, the price of oil is likely to be possibly low for longer, because clearly the authorities should not deplete the reserves of the country, simply because of rules that will be exceedingly rigid. I’m not suggesting that rigidity be totally removed but some degree of flexibility will be helpful.”
On the belief that the IMF’s policies are not usually to the best interest of the poor and the masses, Lagarde said since becoming the managing director of the organisation, the institution’s method has changed.
She, however, said that the country needed a strong tax department, strong debt management and strong custom authority to achieve a strong economy.
“Certainly the last four and a half years, since I have been managing Director of this institution, this is not the recipes we adopted and this is certainly not the feedback I have received from the countries that we have worked with. I just want to point out that we are majorly involved in three kinds of activities.
“The first one which is the most traditional one is under which we give policy advice to our members. We have currently 188 countries that are under this institution and it is our duty and accountability to them to review their economy every year to give them report about their economy. We don’t push them, we don’t do things necessarily to please them; we say things as we see them.
“The second activity which is the fastest growing one in the institution is technical assistance and capacity building, and plenty of that is available to all the countries of the world. It gives us pride to see that about 150 countries have had the benefit of technical assistance and capacity building. We have discussed that with the Minister of Finance together with their team and we would be happy to provide more technical assistance and capacity building. You need a strong tax department, you need a strong debt management, you need a strong custom authority in order to achieve a strong economy for the country.
“The third activity is the lending that we provide because nobody else is ready to provide lending for the country. When the balance is in a very bad situation and when there are no finances available, at that point in time in order to pull the country out of the very difficult situation it is in, we come in and we lend. But we do that because it is the entire international community’s monies. It is not my money; it is the international community’s money.
“And we do so with the right guarantees stepping into international community bonds, which is that the economy is going to be improved, that fiscal discipline is going to be brought in, that corruption is going to be punished. We don’t do as much now as we did four years ago because the situation has improved. As I said earlier on, I am not here to negotiate a programme, at all.”
The IMF boss, who urged President Buhari to forge ahead in his war against corruption and his determination to bring about transparency and accountability at all levels of the economy, charged him to take the issues of poverty and inequality as the drivers of his government’s reforms.
She disclosed that a team of the IMF economists will be coming to Nigeria next week to render assistance on the issue of the country’s revenue base in relation to its budgeting.