By Richard ABANGWU InvestAdvocate

Lagos (INVESTADVOCATE)-Nigeria’s International Reserve has increased by 35 percent (35%) in year 2012 end.

This is part of the International Monetary Fund’s (IMF’s) Executive Board Assessment on Nigeria after it concluded its 2012 Article IV consultation.

According to the IMF, Nigeria’s external position has strengthened and international reserves rose from US$32.6 billion at end-2011 to US$44 billion at end-2012 (5½ months of prospective imports), driven by sustained high oil prices, stricter administration of the gasoline subsidy regime, and strong portfolio inflows.

As part of the IMF’s 2012 Article IV consultation with Nigeria, Macroeconomic performance has been broadly positive over the past year.

Also, the IMF said Real Gross Domestic Product (GDP) growth is projected to have decelerated slightly to 6.3%, reflecting the effects of the nationwide strike in early 2012, floods in the fourth quarter of 2012, and continued security problems in the north.

The IMF affirmed that Annual inflation increased from 10.3% (end-of-period) in 2011 to 12.3% in 2012, owing mainly to the adjustment of administrative prices of fuel and electricity; large increases in import tariffs on rice and wheat; and the impact of floods in Third Quarter (Q3).

“The fiscal policy stance was tightened in 2012 and fiscal buffers are being rebuilt. The non-oil primary deficit of the consolidated government is estimated to have narrowed from about 36% of non-oil GDP in 2011 to 30.5% in 2012, mainly due to expenditure restraint. Monetary policy remained tight in 2012 in response to inflationary pressures” the IMF Board said.

According to the IMF, Nigeria’s Central Bank kept its policy rate unchanged during the year but raised the Cash Reserve Requirement (CRR) for Banks from 8% to 12% and lowered allowable open Foreign Exchange (FOREX) position for banks. “Financial soundness indicators point to continued improvements in the health of the banking system” the IMF said.

The IMF further affirmed that in 2013, growth is expected to recover to above 7%. Inflation is projected to decline below 10%, supported by the tight Monetary Policy stance and ongoing fiscal consolidation. “The key downside risks are a large drop in world oil prices; and slow progress in building consensus around key fiscal reforms” the Fund said.