… Says elimination would ensure fiscal adjustment

From ISAAC ANUMIHE, Abuja

International Monetary Fund (IMF) has advised the Federal Government to remove the remaining oil subsidy, as that would help fiscal adjustments. Speaking with newsmen in Abuja, IMF’s Senior Resident Representative/Mission Chief, Williams Scott Roger, insisted that the nation required public sector reforms, as that is necessary for planned savings of recurrent spending.

He also recommended that the Federal Government should mobilize non-oil revenues and strengthen oil-price rule and oil savings mechanism, while pushing for the maintenance of tight monetary policy until signs of durable reduction of inflationary pressures became manifest.

On the health of banking system, Rogers noted that it has improved considerably, saying that credit to the private sector was growing again and banks are now fully capitalized.

But he added that more work on consolidated and cross-border supervision should be encouraged while stressing the urgent need for structural reforms to enhance productivity and global competitiveness.

The fund stated that power reform was a quick win for growth and competitiveness, submitting that trade protection for “infant-industries” should be strictly time-bound and focus should be on measures to improve competitiveness.

According to Rogers, export diversification is key to long-term growth and improvement in macroeconomic statistics, especially in national income accounts is important.

However, IMF noted that although international reserves have been rebuilt and now stand at just over US$50 billion, a decline in international oil prices to US$97 per barrel (annual average) can erode Excess Crude Account (ECA ) balances and that a fall to US$80-85 would completely wipe out ECA balances within a year.

Source: The Sun