No plan to take IMF loan despite global crisis – Okonjo-Iweala

Finance Minister and Coordinating Minister of the Economy, Ngozi Okonjo-Iweala, has assured that despite the slowdown in global economic growth, the Federal Government has no plans for a loan from the International Monetary Fund (IMF) at the moment.

Instead, she said the nation’s economic management team was working on contingency plans, beginning with analysing various modules and scenarios in terms of oil price shocks.

Okonjo-Iweala, who spoke in Washington DC, United States, on Sunday, said the World Bank Group at its just concluded 2014 Annual Meetings deliberated extensively on the very uncertain mode of the global economy at this point which is expected to grow at just 3.8 per cent for 2015.

The worries, she added, stems from the fact that although the U.S. economy was growing appreciably, just like the UK, but the Euro zone is still experiencing stagnated growth, just like Japan, China and other important drivers of global growth.

The group, she assured, however, noted that Nigeria’s economic growth rate remains robust at 6.5 per cent, remaining one of the world’s fastest.

With oil price dropping steadily to about $84 per barrel of Brent crude, she said the World Bank noted the need for Nigeria to tread with caution.

As a result, she said the Federal Government needs to calibrate this reality into the management of the economy, particularly the 2015 budget.

The World Bank and IMF at a meeting on Saturday, she continued, noted the need for countries in Nigeria’s category to prepare contingency plans “should the slow growth (in the global economy) and oil prices continue to drop.

“One way of doing this, the World Bank Group said, is for the Federal Government to build its fiscal buffers as back up for the economy, in addition to the fact that we need to continue our structure reforms just like in the Euro zone.”

In building external reserves, she said, “the IMF told us we need $6.3 billion. We are now on $4.1 billion. We would look at how we would strengthen the buffer.

“There is no cause for alarm, we are on top of the game. We have to be realistic about our ability to spend.”

With oil prices dwindling, the minister also noted the need for more non-oil collections going forward, and that one way of doing that is blocking more loopholes in tax collections by the Federal Inland Revenue Service (FIRS), which was given a target of $75 billion, out of which $44 billion had been collected as of July 2014, help by external consulting firm of McEnzy.

With these new realities, she said: “We need to go back and encourage them to do more. We have to carefully build up the excess crude account.”

Speaking on the financial sector risk as noted by the World Bank and IMF as areas of concern, Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, assured that the apex bank would have to work towards ensuring the nation’s financial system remains sustainable.

One way of doing this, he said, is by strengthening regulation to put the identified risk factors under control.

Already, at the last meeting of the CBN’s Monetary Policy Committee, Emefiele said it was agreed that there was need to seek ways “to incentivise the banks to enable them lend to the real sector by directing attention to areas that would contribute to economic growth and job creation.

“We need to give banks direction to help them look at lending to areas we think will lead to economic growth.”

Emefiele explained that tightening regulation was not necessarily meant to punish the banks, but to strengthen economic growth and development.

Also fielding questions, Bright Okogwu, Director,

Budget Office, assured that the process of presenting and passing the 2015 Appropriation Bill would be seamless.

Already, he said, the National Assembly, just back from recess has been given the Medium Term Economic Framework, just as there have been consultations on the basic parameters and areas of priority to ensure that areas of disagreement in the budget passage process are considerably reduced.

Also speaking further, Okonjo-Iweala assured that all plans have been concluded to ensure that the Independent National Electoral Commission (INEC) “delivers a good set of elections and that there would be no cash crunch” in the coming months.

The 2014 annual meetings, she said, focused considerably on discussing the killer Ebola virus disease, with Nigeria lending its voice to making the world realise that it is not a West African problem but a global scourge.