World Bank, IMF put pressure on Buhari to come up with economic blueprint

President Muhammadu Buhari and IMF Managing Director, Christine Lagarde in Abuja.

The World Bank and International Monetary Fund, IMF, have piled pressure on the Federal Government to come up with an economic blueprint, if its drive for foreign loans was not to be stalled. Vanguard gathered that officials of both financial  institutions have questioned the Minister of Finance and her team over the absence of a blueprint for which the loans being sought would be utilised.



Sources at the Presidency said at the last IMF/World Bank Group Annual Meetings, that the Nigeria team was asked to produce an economic blueprint for which the IMF/World Bank Group will offer support. Specifically, Vanguard learned that the US Secretary of Finance and that of the United Kingdom, told the Nigerian team that without a comprehensive economic blueprint, Nigeria would not get support from IMF and the World Bank.

The source said that usually, the IMF asks countries for what it called Policy Support Instrument, PSI, an instrument which serves as a document through which the multilateral institution monitors the economic progress of the country they support. The source further said that during the Obasanjo administration, the NEEDS document was the Policy Support Instrument used to negotiate debt relief. The source also said the World Bank Group was interested in such a document as a means of evaluating its recently launched Sustainable Development Goals. It was also learned that at the various road shows in London, foreign investors had asked Nigerians for an economic blueprint. Such an economic framework, they argued, aside from addressing the current challenges, would go a long way to engender confidence in both local and international investors on the way forward. The source said this had become very imperative, given that investor-perception of Nigeria’s outlook was critical to its economic recovery. At the moment, the Federal Government has not been able to come up with such a policy document. But in reaction to Vanguard’s enquiry a presidential aide said the present administration was working on a comprehensive economic blueprint that would soon be ready for launching. The source, who said the issue of economic blueprint had become very contentious in government circles, said the economic management team had produced a blue print that will be launched soon. Stressing the need for an economic blueprint last week, Dr Obadiah Mailafia, a former deputy governor of the Central Bank of Nigeria (CBN), advised the Federal Government to produce a comprehensive economic blueprint to fast track economic growth and development. Mailafia gave the advice while speaking as a guest lecturer at the Federal Radio Corporation of Nigeria, FRCN, 2016 Annual Lecture in Abuja. In the lecture, entitled Fighting Corruption and Growing a Sustainable Nigerian Economy, Mailafia appealed to President Muhammadu Buhari to listen to the right advice that would help fix the nation’s economy within a short time. “Nigerians are getting impatient and they are complaining that this change is not translating into what they are hoping for. “We must do what we have to do to rescue our economy and to get the great Nigerian people back to work,” Mailafai said.” He also advised the government to create an entrepreneurial state by encouraging innovation and generating critical public goods that would support creativity and high level productivity. Besides, he urged government to pursue economic policies within the framework of a coherent and credible development strategy, with a greater coordination between fiscal and monetary authorities. He said:   “Sadly, we noticed that Nigeria does not have an economic administration. The British Chancellor of the Exchequer, for example, has at his beck and call some 300 highly well-trained economists in the Treasury. ‘’Their job is to worry day and night about the economy, monitor key trends, analyse critical developments and proffer policy. We need to build such an administration, in addition to strengthening the National Economic Management Team that has become virtually comatose. “We cannot continue to blame previous administrations. We can only hope like the great Franklin Roosevelt in America of the 1930s and like Barack Obama during the height of the Great Recession. ‘’Our President needs a brains trust of people who love Nigeria passionately and are ready to do what it takes to take us to the path that destiny has ordained for us,” the ex-CBN deputy governor said. Debt Management Office which is charged with the responsibility of borrowing on behalf of government had said in its Debt sustainability report for 2016 “There is an urgent need for the Government to formulate an Economic Blueprint or Road-Map for the medium-term. ‘’Aside from addressing the current challenges, it would go a long way to engender confidence in both local and international investors on the way forward. This has become very imperative, given that investor-perception of a country’s outlook is critical to its economic recovery. ‘’It is advisable that the Federal Government sustains the on-going reforms and initiatives in the various key sectors of the economy, including agriculture, education, housing, power, and transportation, as this would foster the needed inclusive economic growth and development. “The passage of the Petroleum Industry Bill (PIB) by the National Assembly is long overdue and should be given speedy attention by the authorities. ‘’Its passage is expected to liberalise the oil and gas sector, and thus, attract more investments into the sector, which will have positive multiplier effect on the economy. Given that in the short to medium-term, oil would still remains a key revenue earner of the nation, the Federal Government is encouraged to continue on its efforts to curtail crude oil production disruptions in the oil producing areas. “In view of the country’s huge infrastructure requirements, the Federal Government is enjoined to creatively explore other alternative and viable sources of financing critical infrastructure development outside the routine budgetary process. These may include the setting up of an Infrastructure Development Fund, the issuance of Infrastructure-tied Bonds, as well as encouragement for the private sector to participate in funding viable infrastructural projects through Public-Private-Partnership arrangements. “As part of the initiatives for boosting revenue, the Federal Government is encouraged to fast-track the process of liberalising the exploration of the solid minerals deposits across the country. This is to make the sector much more attractive and competitive, and further expand the non-oil revenue base. As part of government’s commitment to encouraging private sector participation in the development of the economy, the demand for FGN Guarantees may likely increase. In order to instill discipline and discourage frivolous requests that may unduly expose the Federal Government, it is also recommended that the issuance of FGN Guarantees to the private sector should attract appropriate fees, and should be within an established framework.” Former President Olusegun Obasanjo weekend also kicked against the plan by the Federal Government to obtain a $29.96 billion foreign loan. Obasanjo was said to have phoned the Minister of Finance, Mrs Kemi Adeosun, shortly after the media reported the loan bid, which the Federal Government explained would be used to finance critical infrastructure deficiency between now and 2018. But the Finance Minister, it was learned, told an alarmed Obasanjo that she would pay him a visit to explain the rationale for the plan, which had triggered mixed reactions on the necessity or otherwise of such loan. The former president, it was gathered, spoke on the proposed foreign loan when he received members of a political association, The National Patriots’ Movement of Nigeria, NPMN, led by the national coordinator, Chief Dosu Oladipo, at his Hilltop residence in Abeokuta, the Ogun State capital, on Friday. Obasanjo, it was learned, not only opposed the loan bid, but also threatened to draw a battle line with the Federal Government should it go ahead to obtain the loan which he said could have far-reaching negative effects on the nation. While some experts have advised the government to deploy part of the funds reportedly recovered from allegedly corrupt politicians in the last political dispensation to such purpose, others claimed the loan could be raised internally. It will be recalled that the Obasanjo led administration had successful negotiated with Western nations to write off $12.5 billion foreign debt to the Paris Club, a body of European creditors during his tenure. However in justifying the proposal for the N29.96 billion external loan, President Muhammadu Buhari, had in a letter to the National Assembly said, “The total cost of the projects and programmes under the borrowing (plan) is $29.96 billion made up of proposed projects and programmes loan of $11.274 billion, special national infrastructure projects, $10.686 billion, Euro bonds of $4.5 billion and Federal Government budget support of $3.5 billion.” But Nigeria’s foreign reserves have dipped lately, ostensibly owing to economic recession and intense pressure on Nigeria’s naira as a result of the scarcity of United States dollars.

From Vanguard