IMF to Nigeria: Revise exchange rate policy to qualify for $1.4bn loan


Nigeria’s quest to secure a $1.4billion loan from the international funding agencies may be hindered, if the country fails to buy-in to reforms being pushed by the International Monetary Fund (IMF), a report has indicated.

The IMF, Reuters said, is expected to warn Nigeria that its economy needs urgent reform, saying a failure to imbibe the measures, could delay talks over $1.4 billion in international loans. The global financial institution, is expected to warn Nigeria that its economy needs urgent reform, according to a report seen by Reuters that could delay talks over $1.4 billion in international loans.

The Washington-based fund will urge Nigeria, a major oil producer, to introduce immediate changes to its exchange rate policy, saying the nation’s recent reform plan is not enough to drag Nigeria’s economy out of recession, the report, billed for release on March, 29, said.

“Much more needs to be done,” the IMF said in the document, written after a final meeting between its representatives and top officials in Abuja before the fund issues its verdict on Nigeria’s economy next week.

“Further actions are urgently needed,” it said.

The report – from the fund’s acting secretary and addressed to members of its executive board – is set to form part of the IMF’s verdict, although Nigeria can request alterations. Three people familiar with the negotiations said it would send an important signal to institutional lenders.

The World Bank has been in talks with Nigeria for a loan of at least $1 billion for more than a year and the African Development Bank (AfDB) has $400 million on offer, but discussions have stalled over economic reforms. Nigeria is seeking the funding for infrastructure investment and to help plug an expected record deficit in this year’s budget as it boosts spending to try to end a recession.

“The tone of the IMF will be critical in terms of signaling,” said one of the people familiar with the negotiations, who spoke on condition of anonymity because they were not authorised to speak to media.

Two of the people with knowledge of the loan talks said the lenders were unlikely to withhold funding entirely.

President Muhammadu Buhari has rejected a devaluation of the Naira and backed curbs imposed by the Central Bank that force firms to buy dollars needed for imports for a premium on the black market.

Nigeria has at least five exchange rates – the official one, a rate for Muslim pilgrims travelling to Saudi Arabia, one for school fees abroad and a retail rate set by licensed exchange bureaus.