IMF Cautions FG Against Reckless Spending

from All Africa

Vanguard (Lagos)

By Michael Eboh
Lagos

The International Monetary Fund (IMF) has cautioned Nigeria on the need to reduce its overall economic spending if it hopes to achieve any meaningful development and success in its drive towards the alleviation of poverty.

According to a Public Information Notice (PIN) on Nigeria released by the IMF, any attempt to increase the overall spending of the country would further plunge the economy into backwardness and significant deterioration.

"The Directors considered the government's medium-term fiscal strategy a sound foundation for fiscal policies, and encouraged the authorities to adhere to the strategy's deficit targets. Spending on priority areas has increased appropriately during the last few years within a prudent resource envelope and in line with absorptive capacity, providing scope to address pressing infrastructure needs.

Directors cautioned that if overall spendings were to again increase significantly, medium term prospects for non-oil growth would likely deteriorate, to the detriment of development and poverty alleviation efforts," it said

The IMF asked the Federal Government to enter into strategic alliance with the states to redirect spendings from oil revenue to protect macro-economic stability and ensure a positive outlook for faster growth, poverty reduction and attainment of the Millennium Development Goals (MDGs).

It commended the economic reforms programmes of the Federal Government and advised it to finalise and implement the debt management framework at all levels of governance, from the states to the local governments.

It expressed satisfaction at the rate at which banks in Nigeria are making inroads into the global financial markets, tapping from the opportunities presented by globalisation. It attributed this to the successful consolidation exercise in the banking sector, which, according to it, helped in strengthening the country's banking sector.

It advised the regulatory authorities to keep abreast with current and future developments in the local and global banking sector, strengthening supervision and introducing more innovative policies that would drive the sector to greater heights.

The IMF, realising the importance of adequate infrastructural facilities to the development of the economy, called on the Federal Government to address the issue of deficient infrastructure in the country and to empower the public finance mechanism.

"The authorities should move forward to address the infrastructure gap and strengthen further the public financial management system," it noted.