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The International Monetary Fund (IMF) has expressed serious concerns over the worsening level of security conditions in Nigeria, maintaining that it was contributing to the subdued Gross Domestic Product (GDP) figures in the country.
The global financial body also listed other negative risks in the near-term to include the elections, low vaccination against Covid-19 and higher global interest rates.
The Washington-based institution made these claims in an end-of-mission statement on Wednesday at the end of its staff visit with Nigeria.
It disclsoed that an IMF team led by the Country Director, Ms. Jesmin Rahman, held meetings with Nigerian authorities from June 6th to 10th, 2022, to discuss recent economic and financial developments, and the economic outlook for the country.
The fund in the statement noted that Nigeria’s economic recovery continued to gain strength on the back of services and agriculture with GDP growth reaching 3.6 percent (y/y) in first quarter 2022.
It stated that inflation reached 17.7 percent (y/y) in May led by a renewed surge in food prices, exacerbated by the war in Ukraine, and raising food security concerns as over 40 per cent of the population live below the poverty line.
‘To contain inflationary pressures, the Central Bank of Nigeria has recently hiked its monetary policy rate by 150 basis points to 13 per cent.
‘Regarding the external sector, the current account deficit narrowed significantly in 2021 helped by import compression and higher net oil balance. However, the improving trade balance, which has continued so far in 2022, is having a limited impact on forex strains with the exchange rate premiums in the parallel market staying in the 35-40 percent range since October 2021,’ it added.
According to the IMF, despite supportive oil prices, the country’s gross FX reserves fell to $38.6 billion at end-May 2022, having reached $41.5 billion in September 2021 boosted by SDR allocation and Eurobond issuance.