IMF reduces Nigeria’s 2020 economic growth projection by 0.5 per cent

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The International Monetary Fund (IMF) has reviewed downward its 2020 economic growth rate for Nigeria to two per cent from the 2.5 per cent it had predicted earlier.

According to the IMF, the cut reflects the impact of lower international oil prices while inflation in the country is expected to pick up. In addition, it predicted that “deteriorating terms of trade and capital outflows will weaken the country’s external position.”

The position of IMF team was signed by the institution’s the Senior Resident Representative and Mission Chief for Nigeria, Amine Mat, on Monday, February 17, 2020.

Mati said external vulnerabilities in the country were increasing, reflecting a higher current account deficit and declining reserves that remain highly vulnerable to capital flow reversals.

The exchange rate has remained stable, helped by steady sales of foreign exchange in various windows.

“High fiscal deficits are complicating monetary policy. Weak non-oil revenue mobilisation led to further deterioration of the fiscal deficit, which was mostly financed by CBN overdrafts. The interest payments to revenue ratio remain high at about 60 per cent.

“Under current policies, the outlook is challenging. The mission’s growth forecast for 2020 was revised down to two per cent to reflect the impact of lower international oil prices. Inflation is expected to pick up while deteriorating terms of trade and capital outflows will weaken the country’s external position,” he said.

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