The IMF is in town

Nigeria is going to borrow almost $30m a day to fund the 2016 budget. Nigeria will borrow N420b just to pay federal workers salaries in 2016.

Nigeria will borrow locally and internationally. .so make no mistake about it we need a good IMF nod.

The IMF lady is here to "vet" us.....leave the tweets and polite soundbites. ...the real IMF report will come in their Article IV Consultation document with Nigeria. The last one was held in March 2015....let me share an excerpt.

" As the oil price fall appears more permanent than temporary, additional policies will be needed, including greater flexibility in the exchange rate and further fiscal adjustment, particularly in state and local governments. It will be essential to ensure that fiscal adjustment is achieved without endangering the delivery of critical public services"
IMF to Nigeria March 2015

In English, the IMF told us in March 2015 that as oil prices are reducing we need to devalue and raise fiscal revenues either by tax hikes, fiscal federalism or subsidy adjustment. Especially for States and LGA....this was when oil was above $80

Now oil is below $40.....we see clearly the contigent risks posed by States and LGAs...States have largely survived in 2015 on bailouts from the FGN, there is no indication the insolvent states have restructured enough to cover their monthly salary obligations. Long term solution to states financial issues is to revisit the fiscal federalism of Nigeria.

On the subsidy side, our expenditure on subsidy is reduced but this has largely been achieved dues to fall in crude oil price not any reforms or wholesale adjustment in PPPRA template ...

What about tax hikes? Any indication? Not yet.

The big issue remains an appropriate pricing for the Naira. ..today the Naira is simply overvalued, this will encourage imports and put pressure on fragile reserves....the CBN can't simply bury it's head in the sand and call it "speculation".....

So let's wait for the next IMF Article IV reports, there have been strong and positive reforms in the NNPC and the Customs and a leadership change in the FIRS, these will be a positive factors in our favour.

It's our problems, we can fix it

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