The coronavirus pandemic would hit Africa’s most populous country of Nigeria hard, the International Monetary Fund (IMF) projected in Washington DC on Wednesday.
The IMF African Department Director Mr. Abebe Aemro Selassie, said Nigeria had already been hit by fallen oil prices before the coronavirus pandemic complicated policy making environment.
“In the medium term, the challenge for Nigeria, we feel, is really prioritizing revenue mobilization, so that the government has enough resources that it can devote to building infrastructure, building the network of universities and public education entities, that Nigeria so badly needs. That, really, is the number one medium term priority.
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“The focus, we feel, over the next four, five years, has to be to try to put Nigeria in a position where the federal government has sufficient revenue the development spending needs that the country has,” Selassie said.
He said in the near term, no resources should be spared to help tackle the health crisis. He said since Nigeria had already applied for a quick loan, the funds should be used to respond to the health threat the country faces.
There is also room for monetary policy exchange rate framework that would be supportive of Nigeria’s fiscal stand to the current crisis behind it, Selassie said.
On the latest economic outlook for Sub-Saharan Africa, IMF said Sub-Saharan Africa in 2020 would experience its lowest level growth on record, tumbling from an initial forecast of 3.6 percent before the coronavirus pandemic hit the world, to –1.6 percent from now on.
Last October, the IMF projected growth in sub-Saharan Africa was going to remain at 3.2 percent in 2019 and rise to 3.6percent in 2020, but the COVID-19 pandemic has completely changed all the equations with a negative growth of -1.6 percent now being expected this year.
IMF said, subject to many other factors, including adjusted fiscal and monetary policy formulations as well as global solidarity, growth in Sub-Saharan Africa is projected to recover in 2021 to about the 4percent mark.
“The depth of the slowdown in 2020 and the speed of recovery will depend on several factors, including how the pandemic interacts with weak local health systems, the effectiveness of national containment efforts, and the strength of support from the international community,” IMF said.
The pandemic “threatens to exact a heavy human toll, and the economic crisis it has triggered can upend recent development progress”, IMF said, adding that the policy priority should be “to ramp up health capacity and spending to save lives and contain the virus outbreak”.
It said support from all development partners would be essential “to address the sizable financing needs, including debt relief for the most vulnerable countries.”
“Fiscal, monetary, and financial policies should be used to protect vulnerable groups, mitigate economic losses, and support the recovery,” IMF recommended.
“The immediate priority is for countries to do whatever it takes to ramp up public health expenditures to contain the virus outbreak, regardless of fiscal space and debt positions. Sizable, timely and temporary fiscal support is crucial to protect the most affected people and firms, including those in the informal sector,” IMF said in its regional economic outlook.
“Policies could include cash or in-kind transfers to help people under strain (including through digital technologies) and targeted and temporary support to hard-hit sectors. Once the crisis has subsided, countries should revert fiscal positions to paths that ensure debt sustainability,” it added.
Apart from the fiscal policy adjustments, IMF said “a more supportive monetary stance and injection of liquidity can also play an important role in sustaining firms and jobs by supporting demand.”
“Financial sector supervision should aim to maintain the balance between preserving financial stability and sustaining economic activity. For countries with floating regimes, exchange rate flexibility can help cushion the external shocks, while some drawdown of reserves to smooth disorderly adjustment may mitigate potential financial implications from foreign exchange mismatches.
“For countries facing sizable and disorderly capital outflows, temporary capital flow management measures could be considered as part of a wider policy package,” IMF said, adding that “economic forecasts at this juncture are subject to higher-than-usual degrees of uncertainty.”