Nigeria has no reason to seek IMF loan – Edun

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has said Nigeria has no reason to approach the International Monetary Fund (IMF) for loans.

While speaking on the sidelines of the ongoing World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Edun said Nigeria does not have a balance of payments problem and therefore will not need the short-term financing intervention by the international bank.

He explained that the country relies on relatively cheaper borrowing sources from the World Bank and the African Development Bank (AfDB).

“I can imagine the headlines if you saw a situation whereby you were saying Nigeria approaches the IMF for funding. But the reality is that, of course, as a developing country, requiring investment, funds for the government for investment in key infrastructure to improve the enabling environment for business, we do need funds, and we need to borrow.

“We have relied on relatively cheap funding from the multilateral, from the World Bank, from AfDB, and the whole spectrum of funding has been used. We have relied on Nigerian savings by convincing them of the macroeconomic plan of the president, and what it holds in terms of the prospects for growth of the economy and business, and improvement of the business environment.

“And, of course, we have approached the Eurobond market, which is, of course, the commercial end of financing. So we’ve done that whole spectrum. When it comes to IMF financing, typically financing from the IMF is to help with short-term balance of payments issues and crises.

“In the case of Nigeria, we have a positive trade balance. We have a positive current account balance. Our reserves are growing. The Governor of the Central Bank recently announced that we had achieved upwards of a $10 billion improvement and increase in the reserves.

“In such a case, funding by the IMF is not the appropriate source. And where we are now is that having utilized multilateral financing, and concessional financing as much as possible, we need to optimize our assets.

“We need to use equity. We need to rely on crowding in the savings, particularly of the private sector in Nigeria and the private sector around the world in the form of foreign direct investment. We have to remember that at this time, we have had significant gains in terms of improving the economic environment,” Edun stated.

Admitting that the country is plagued by food inflation and a high cost of living, Edun called for a cut in demand and a boost in supply to mitigate the situation.

“However, we also admit and we confront fully the fact that inflation is relatively high. Cost of living is high. Cost of food is high. And that is the focus of Mr. President’s determination in terms of what to tackle next. It is the high rate of inflation, of course, led by the Central Bank, which controls the monetary tools, interest rates in particular. But also, inflation is not just for the monetary side.

“Inflation is a fight for all of us. And on the fiscal side, there is much to be done in increasing the supply. If you want the price of a good to go down, it’s not just a question of restricting demand.

“It’s also a question of increasing supply. And in particular, as has happened during this dry season harvest, which is going on in Nigeria, with concerted efforts to provide the smallholders in particular with the various inputs, herbicides, fertilizer, and seeds, we are having a good harvest, but more needs to be done there.

“And there’s a commitment to increasing food production, so achieving a lower price of food, more availability, and affordability of food for Nigerians, that is a major commitment, alongside growing the economy as a whole,” Edun pointed out.