The Nigerian economy is at a critical juncture and grappling with multiple shocks from COVID-19 pandemic, the International Monetary Fund (IMF) said on Monday, urging authorities in the West African nation to implement reforms.
IMF said “a weak pre-crisis economy characterized by falling per capita income, double-digit inflation, significant governance vulnerabilities and limited buffers, is grappling with multiple shocks from the COVID-19 pandemic.”
Real output in Nigeria is projected to contract by 3.2 percent in 2020, with a weak recovery likely to keep per capita income stagnant and no higher than the 2010 level in the medium term.
IMF wrote: “Nigeria’s economy has been hit hard by the COVID-19 pandemic. Following a sharp drop in oil prices and capital outflows, real GDP is estimated to have contracted by 3.2 percent in 2020 amidst the pandemic-related lockdown.
“Headline inflation rose to 14.9 percent in November 2020, a 33-month high, reflecting core and food inflation increases emanating from supply shortages due to the lockdown effected to curb infections alongside the land-border closure and continued import restrictions.
“The unemployment rate reached 27 percent in the second quarter of 2020, with youth unemployment at 41 percent. The Nigerian authorities acted swiftly to adopt a pandemic-related support package equivalent to 0.3 percent of GDP in the 2020 revised federal budget despite limited fiscal space.
“External vulnerabilities due to lower oil prices and weak global demand have increased, with the current account remaining in deficit in the first half of 2021. In April 2020, Nigeria received IMF emergency financial assistance of $3.5 billion under the Rapid Financing Instrument to help cushion the impact of the pandemic.”
“Policy adjustment and reforms are urgently needed to navigate this crisis and change the long-running lackluster course,” added the Washington DC-based institution in its staff report.