Tag: IMF

  • 98.5% of eNaira Wallets Are Left Unsued – IMF

    98.5% of eNaira Wallets Are Left Unsued – IMF

    The International Monetary Fund has described the public adoption of the eNaira as disappointingly low.

    This was contained in a working paper that was released recently by the body and titled ‘Nigeria’s eNaira, One Year After’, where the Bretton Woods institution highlighted how the digital currency fared in its first year.

    President Muhammadu Buhari formally unveiled the digital currency at the state house in Abuja on October 25, 2021.

    The IMF however said about 98.5 percent of eNaira wallets that were downloaded after the unveiling have been left unused.

    While stating that the Central Bank Digital Currency project had yet to move beyond the initial wave of limited adoption, IMF added that the eNaira usage by households and merchants has been slow.

    “The retail wallet downloads saw a few weeks of the initial surge before tapering off. More specially, it only took 25 days for the number of downloaded wallets to reach 500,000 units—but going from there to 600,000 units took another 63 days; and to 700,000 units yet another 143 days,” the paper reads.

    “As of end-November 2021, the total number of retail eNaira wallets amounted to about 860,000. This is just 0.8 per cent of Nigeria’s active bank accounts.

    “Merchant wallet download has reached about 100,000 in end-June, which is about one-eleventh of the number of merchants with Point-of-Sales (POS) terminals—which enables credit or debit card payments.”

    The institution further revealed that the downloaded wallets recorded low transactions while some have not been active except for the initial surge it recorded shortly after it was launched.

    It added that the average number of eNaira transactions weekly were carried out only by 1.5 percent of downloaded wallets.

    “The average number of eNaira transactions since its inception amounts to about 14,000 per week—only 1.5 percent of the number of wallets out there. This means that 98.5 percent of wallets, for any given week, have not been used even once,” the paper further reads.

    “The average value of eNaira transactions has been 923 million naira per week—0.0018 percent of the average amount of M3 during this period. The average value per one transaction has been N60,000.”

    It added that the eNaira’s potential in financial inclusion requires a strategy to set the right relationship with mobile money, given the former’s potential to either complement or substitute the latter,” the institution said.

    “Cost savings from integrating CBDC—as a bridge vehicle—in the remittance process may also be substantial.”

  • Nigeria’s GDP To Grow By 3.2% In 2023 – IMF

    Nigeria’s GDP To Grow By 3.2% In 2023 – IMF

    The International Monetary Fund (IMF) has retained its growth forecast of 3.2 percent for Nigeria’s economy in 2023.

    The IMF, in its World Economic Outlook for April 2023 titled ‘A Rocky Recovery’, also forecast a three percent growth in the country’s gross domestic product (GDP) for 2024.

    Other countries highlighted in its 2023 projections were USA (1.6%), Germany (-0.1%), France (0.7%), Italy (0.7%), Spain (1.5%). Japan (1.3%), UK (-0.3%), and Canada (1.5%).

    Others are China (5.2%), India (5.9%), Russia (0.7%), Brazil (0.9%), Mexico (1.8%), Saudi Arabia (3.1%), and South Africa (0.1%).

    Naira Depreciation
    The projection by the Washington DC-based global lender comes days after the World Bank revealed that the naira recorded a 10.2 percent depreciation in 2022, prompted by rising food and fuel prices globally, among other stimulants.

    In its Africa Pulse report published last week, the World Bank stated that the depreciation of the exchange rate was also a major contributor to inflationary pressures in the Sub-Saharan region.

    “In Nigeria, recently released activity data show mixed results. On the one hand, real GDP growth was higher than expected in the fourth quarter of 2022. It picked up to 3.5 percent y/y, from 2.3 percent in the third quarter. Both oil and non-oil sector activity improved by late 2022,” it said.

    “After a 22.7 percent y/y contraction in the third quarter of 2022, oil GDP fell by 13.4 percent y/y in the fourth quarter as security services were making headway against oil theft.”

    Recession In Third Of The World
    In January, Head of IMF Kristalina Georgieva ushered the comity of nations into 2023 with a warning that the world’s economy was in for a tougher year as it projected one-third of the globe sliding into recession.

    The year 2022 had seen various countries suffering the ripple effects of the ongoing Russia- Ukraine conflict, the resurgence of the COVID-19 virus in China as well as stifling inflation indices not just on the African continent but amongst some of the biggest economies.

    Georgieva, explaining the IMF’s October global economic growth outlook for 2023, insisted that the best of economies might likely not be spared from the far-reaching effects of the recession.

    “We expect one-third of the world economy to be in recession, she said on the CBS news programme Face the Nation.

    “Even countries that are not in recession, it would feel like a recession for hundreds of millions of people.”

  • Naira Note: IMF Calls For CBN Deadline Extension

    Naira Note: IMF Calls For CBN Deadline Extension

    The International Monetary Fund (IMF) has asked the Central Bank of Nigeria to consider extending the February 10 deadline for the swapping of old naira notes.

    The Fund in a statement on Wednesday cited disruptions in trade and payments resulting from the exercise.

    “In light of hardships caused by disruptions to trade and payments due to the shortage of new bank notes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline,” Ari Aisen , the Fund’s Resident Representative to Nigeria, said in statement on Wednesday.

    The statement was signed on his behalf by Laraba S. Bonnet, Office Manager for Resident Representation for Nigeria.

    The statement came as the Supreme Court on Wednesday restrained the CBN from going ahead with the February 10 deadline. The Court gave the order in a ruling on a case brought before it by three State governments.

    CBN had originally fixed the deadline for January 31 but had to extend it in response to pressures from Nigerians.

  • Finally, IMF Gives Reason for Global Inflation

    Finally, IMF Gives Reason for Global Inflation

    The International Monetary Fund has attributed the current global inflationary pressure to the dramatic increase in shipping costs.

    In a new report titled “the costs of misreading inflation,” the lender said that by October 2021, indicators of the cost of shipping containers by maritime freight had increased by over 600 per cent from their pre-pandemic levels, while the cost of shipping bulk commodities by sea had more than tripled.

    According to the report, as manufacturing activity picked up following extended COVID-19 lockdowns, demand for shipping intermediate inputs (such as energy and raw materials) by sea increased significantly.

    At the same time, shipping capacity was severely constrained by logistical hurdles and bottlenecks related to pandemic disruptions and shortages of container equipment.

    It further noted that ports around the world lacked workers, who had to self-isolate after testing positive for COVID-19, and public health restrictions prevented truck drivers and ship crews from crossing borders.

    It read partly, “While skyrocketing food and energy prices were making headlines, the surge in shipping costs seemed to pass largely under the radar, despite its potential inflationary impact. Our analysis suggests that a doubling of shipping costs causes inflation to increase by roughly 0.7 percentage points.

    “Given the actual increase in global shipping costs during 2021, the IMF estimates that the impact on inflation in 2022 was more than 2 percentage points—a huge effect that few central banks would dismiss.”

    The global lender said its study showed that the effect of the shipping cost shock on inflation was longer-lasting than the effects of commodity price shocks, peaking after about a year and lasting up to 18 months.

    “By contrast, the impact of global oil prices on consumer price inflation peaks after only two months.

    “Of course, this average result varies across economies and regions, and it depends on monetary policy frameworks, particularly central banks’ track record of stabilising prices and anchoring expectations, as well as on more structural features such as geography (which affects an economy’s remoteness and dependence on goods shipped by sea).

    “Our evidence suggests that the impacts of surging shipping costs are likely to be larger and more persistent in countries with less-anchored inflation expectations and weaker monetary policy frameworks. Lower-income countries and some emerging market economies may be more at risk than advanced economies with established price stability credentials,” the statement added.

  • IMF reveals what will happen to oil revenues in Nigeria, other countries

    IMF reveals what will happen to oil revenues in Nigeria, other countries

    The International Monetary Fund has warned Nigeria and other oil-producing countries in Sub-Saharan Africa to expect a decline in oil revenues as the world transitions from fossil fuels to cleaner energy in the coming years.

    This was stated in a new report titled “Savings from Oil Revenues Could Help Africa’s Producers Manage Price Swings,” the fund said oil exporters in sub-Saharan Africa should target buffers of around 5 to 10 per cent of gross domestic product to manage large swings in oil prices.

    It means Nigeria would need to maintain annual fiscal surpluses of at least one per cent per annum over a 10-year period.

    IMF’s latest Regional Economic Outlook showed that oil prices have fluctuated from lows of $23 per barrel to a peak of $120 in the last two years, resulting in highly uncertain revenues in oil-dependent economies.

    According to the report, most oil exporters in the region have not accumulated enough savings to insure against unpredictable oil price changes.

    It added that sovereign wealth funds in sub-Saharan Africa hold assets of just 1.8 per cent of gross domestic product, compared to 72 per cent in the Middle East and North Africa, forcing countries to borrow or draw down financial assets whenever oil prices fall.

    The report read in part, “As a result, in the decade through 2020, the region’s oil producers have grown over two percentage points slower per year than non-resource intensive countries. Debt service costs have also been almost twice as high as in other sub-Saharan African countries

    “Moreover, as countries transition to low-carbon energy sources, oil revenues could sharply decline. By 2030, oil revenues in the region could fall by as much as a quarter and by 2050, by half. Building buffers now would help the region’s oil exporters navigate the transition toward clean energy while managing oil price fluctuations.”

    Meanwhile, IMF has said Nigerian and other countries’ economies have grown below the regional average of 3.6 percent this year.

    In a recent news blog titled, ‘Countries hurt by war and fragility need strong global partnerships, resources’ the IMF listed Burkina Faso, Central African Republic, Comoros, Eritrea, Mali, Nigeria, and Zimbabwe as countries affected the low growth problem.

    The Washington DC based financial body said that consumer prices had increased by more than 20 per cent on average this year, while public debt was approaching 60 percent of gross domestic product, a level not seen since the early 2000s.

    The IMF also said that 12 per cent of the region’s population faced acute food insecurity, equivalent to two-thirds of the worldwide total.

    The post read in part “Sub-Saharan Africa, home to about half of countries in the FCS category, has been hit particularly hard. Consumer prices have increased by more than 20 percent on average this year, while public debt is approaching 60 percent of gross domestic product a level not seen since the early 2000s.

    “We forecast that economic growth in seven countries Burkina Faso, Central African Republic, Comoros, Eritrea, Mali, Nigeria, and Zimbabwe will be below the regional average of 3.6 percent this year. In addition, 123 million people, or 12 percent of the region’s population, face acute food insecurity, equivalent to two-thirds of the worldwide total”

    The IMF also said that more than one-third of the countries in the region were confronted with lingering effects from the pandemic and higher food and energy prices.

    The financial body added that growth had remained sluggish at less than 1 percent, while per capita Gross Domestic Product continues to decline.

    It added, “More than one-third of the countries in the region confront lingering effects from the pandemic and higher food and energy prices.

    “Growth has remained sluggish at less than one percent, while per capita GDP continues to decline. Consumer prices are projected to rise by more than 30 percent on average this year and inflation will remain in double digits in 2023. Public debt as a share of GDP is forecast above 60 percent”

  • FG replies IMF, says Nigeria Won’t Face Food Insecurity

    FG replies IMF, says Nigeria Won’t Face Food Insecurity

    Nigerians should not be afraid of any form of food crisis, the Federal Government said on Monday, as it kicked against the projections of the International Monetary Fund.

    It stated that several measures had been put in place to forestall the scarcity of food in Nigeria, stressing that there was no need for panic among citizens across the country.

    On Monday, the International Monetary Fund said Nigerians should brace up for higher food prices/risks in 2023 due to recent floods and high fertiliser prices.

    But the Federal Ministry of Agriculture and Rural Development opposed the position of the global financial institution, as it provided a document detailing what the FMARD had done and was doing to avert such a crisis.

    “People shouldn’t be afraid of any food crisis. The minister has explained this and so people should not express fear about their (IMF) projections,” the Director, Information, FMARD, Joel Oruche, told our correspondent.

    In the document on the Long/Short Term Measures to Ameliorate the Disruptions of Food Production and Supply in Nigeria, the ministry said it was implementing various interventions to mitigate the anticipated disruptions occasioned by the recent floods.

    The FMARD said it had distributed “assorted food commodities from the Federal Government strategic food reserve to the vulnerable and flood victims through the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development.”

  • 2023: IMF warns Nigeria of looming Food Crisis

    2023: IMF warns Nigeria of looming Food Crisis

    The International Monetary Fund has said that Nigerians should brace up for higher food prices/ risks in 2023 due to recent floods and high fertilizer prices.

    According to the National Bureau of Statistics, food inflation hit 23.72 per cent on a year-on-year basis in October 2022, with inflation on certain food items rising to between 50 – 100 per cent.

    Despite that, the IMF has predicted that since recent floods have affected agricultural productivity, saying that food prices would worsen in 2023.

    It added that the volatility in the value of the naira, the Federal Government’s continued dependence on the Central Bank of Nigeria for financing its budget deficit, and climate change were also risk factors.

    The Washington-based lender disclosed this in its ‘Nigeria: Staff Concluding Statement of the 2022 Article IV Mission’ report seen by our correspondent at the weekend.

    It said, “The effects of recent flooding and high fertilizer prices could become more entrenched impacting negatively both agricultural production and food prices in 2023.

    “Similarly, further volatility in the parallel market exchange rate and continued dependence on central bank financing of the budget deficit could exacerbate price pressures. In the medium term, there are downside risks to the oil sector from possible price and production volatility, while climate-related natural disasters pose downside risks to agriculture.”

    It added that despite Nigeria’s limited direct exposures, the war in Ukraine was affecting the nation through higher domestic food prices. The IMF said high food insecurity was compounding the pandemic’s effect on Nigeria’s vulnerable.

    It stated that the nation’s headline inflation should moderate by the end of 2022 because of the start of the harvest season, although it also projected an increase in rice prices caused by recent flooding.

    The IMF further stated that over the next 10 years, the nation would have to create about 25 million additional jobs. It said, “Strengthening the performance of the agricultural sector is key to job creation, food security, and social cohesion.

    “Over the next decade, an estimated 25 million additional jobs will be needed to employ the new labor market entrants. For agriculture to continue playing a strong role in employment and ensure food security, boosting production and yields through improved input usage, especially through affordable fertilizers and higher quality seeds, better storage facilities and more coordinated policy support across government agencies are recommended.”

    The NBS disclosed last Thursday that 133 million Nigerians were multidimensionally poor, with a significant portion of them lacking access to food security, healthcare, and education.

  • IMF Releases $1.3bn In Emergency Aid For Ukraine

    IMF Releases $1.3bn In Emergency Aid For Ukraine

    The International Monetary Fund announced Friday it will provide $1.3 billion in emergency aid to Ukraine through its new food crisis assistance program.

    The package will help meet Ukraine’s “urgent balance of payment needs… while playing a catalytic role for future financial support from Ukraine’s creditors and donors,” the IMF said in a statement.

    “The scale and intensity of Russia’s war against Ukraine that started more than seven months ago have caused tremendous human suffering and economic pain…. Real GDP is projected to contract by 35 percent in 2022 relative to 2021 and financing needs remain very large.”

    Ukrainian President Volodymyr Zelensky had unveiled the IMF’s aid earlier Friday. “The money will go to Ukraine today,” he said on Twitter, thanking the crisis lender’s managing director Kristalina Georgieva and its executive board.

    The IMF also said Ukrainian authorities “deserve considerable credit for having maintained an important degree of macro-financial stability in these extremely challenging circumstances.”

    Last week, the World Bank granted Ukraine $530 million in additional aid to “meet urgent needs created by Russia’s invasion.” The bank said it had already mobilized almost $13 billion in emergency funding for Ukraine, $11 billion of which had already been disbursed.

    The same day, the US Congress approved a new $12.3 billion aid package for Ukraine, including $3.7 billion in military equipment. The United States has given a total of $65 billion to Kyiv since Russia invaded in February.

    President Vladimir Putin announced late last month that Russia had annexed four regions in Ukraine’s south and east. But Kyiv’s forces in recent weeks have been pushing back against Russian soldiers across the frontlines, including in parts of Donetsk.

  • Inflation pushing Nigeria, others to the brink — IMF

    Inflation pushing Nigeria, others to the brink — IMF

    THE International Monetary Fund has said inflation, debt, and forex crisis is pushing the Nigerian economy and other African economies to the brink.

    The Managing Director of the IMF, Kristalina Georgieva, said ministers of finance and central bank governors on the continent disclosed this to her this week.

    She added that most countries on the continent could raise money from the global financial markets and do not have large domestic markets to turn to.

    She stated, “The particularly difficult conditions in many African countries at this moment is important to consider. In my meeting with Ministers of Finance and Central Bank Governors from the continent this week, many highlighted how the effects of this, entirely exogenous, shock was pushing their economies to the brink.

    “The effect of higher food prices is being felt acutely as food accounts for a higher share of income. Inflation, fiscal, debt and balance of payments pressures are all intensifying. Most are now completely shut out from global financial markets; and unlike other regions don’t have large domestic markets to turn to.

    “Against this backdrop, they are calling on the international community to come up with bold measures to support their people. This is a call we need to heed.”

    Georgieva disclosed this in a report titled, ‘Facing a Darkening Economic Outlook: How the G20 Can Respond,’ on the IMF’s website. The report, which was released on Wednesday, is a backdrop to the meeting that G20 ministers and central bank governors will have in Bali later this week.

    According to the MD of the Washington-based lender, the human and economic impact of the war in Ukraine has worsened with commodity price shocks and an increase in cost of living leading to a crisis for hundreds of millions of people.

    She said inflation is now higher than expected and has broadened beyond food and energy prices which has prompted major central banks to announce further monetary tightening.

    She disclosed the fund would downgrade its global growth projection for both 2022 and 2023 in its World Economic Outlook update later this month.

    She explained that it is going to be a tough 2022, and the possibility of a tougher 2023 is quickly materialising.

    Georgieva stated, “It is going to be a tough 2022—and possibly an even tougher 2023, with increased risk of recession.

    “That is why we need decisive action and strong international cooperation, led by the G20. Our new report to the G20 outlines policies that countries can use to navigate this sea of troubles.”

  • IMF ‘Doom Loop’ Warning – Fate of Economic Growth

    IMF ‘Doom Loop’ Warning – Fate of Economic Growth

    By Adefolarin A Olamilekan

    Global economic eventa in recent times is in a twist of fate. Especially as both developed and developing economies are upper-most in recovery from the unpleasant economic impact of Corona virus. Hence, we can not forget in a hurry the global economic projection that follows post covid-19 pandemic.
    Nevertheless, just as the world was getting set to overcome the economic shock of the pandemic era.The Ukrainian- Russian war explode with it own consequences,both in human casualties and resources calamities. State Actors and non state actors have all lend there voices either for or against.
    Conversly, what is generally peceives as the fall out of the Ukrainian – Russian war presently. The world cannot ignore is it impact on global economy,specifically on energy – crude oil,gas,coal and wheat food chain supply.
    Chiefly, the United Nations for instance,specfically caution that the war would escalate “world food crisis”
    This has left the entire global community to wakeup and set in motion how best to keep world food supply and distribution intact. However,the humanitarian crisis erupting from the war is an headache the world is grappling with.
    Interesting, the foregoing is to help us appreciate the title and focus of this piece.Dissecting the recent warning and forcast from the International Monetary Fund (IMF) on global economic.
    Humbly we can say, the IMF in twin seccesive report, that first upgrades Nigeria’s economic growth forecast to 3.4%.This was revealed in the Washington based Britton-Wood Institution ‘World Economic Outlook: War Sets Back the Global Recovery, report.
    Second, was a warning coming from the neolibral lender in a report, titled “Emerging-Market Banks’ Government Debt Holdings Pose Financial Stability Risks”.
    In the first report, the IMF was concerned with the global economic projection,that it streamline to reveal the institution thinking about Sub-Sahara African economics growth, before religiously predicting that of African largest economy. The global economy according to the Washington-based lender, is projected to slow from an estimated 6.1 per cent in 2021 to 3.6 per cent in 2022 and 2023. This recent updated is a departure from its January 2022 World Economy Outook forecasted before the ongoing war between Ukraine and Russia.
    On the Sub-Saharan African region it projected 4.5 per cent in 2021, 3.8 per cent in 2022, and 4.0 per cent in 2023.
    Given the projection above, individual nation like Nigeria is not isolated from global economic event.
    In retrospect the IMF earlier in this year report, predicted a growth rate of 2.7 per cent for Nigeria in 2022. However, the latest update projection that is adjust due to active rising oil prices of which Brunt crude stand at $106.86/barrel. Draw attention and call for a watch.
    Unfailingly, also IMF disclose a 3.1 per cent growth projection for the nation in 2023, down from 3.4 per cent in 2022 and 3.6 per cent in 2021.
    All of this aforemention national forecast on economic projection in clear terms is to help in evaluating what need to be done. On trending challenges the economy is contending with on daily basis.
    On the second report,the IMF strongly said there is a possibility of “doom loop” for Nigeria and other emerging economies.In the report “Emerging-Market Banks’ Government Debt Holdings Pose Financial Stability Risks”. Sadly, a ”doom loop’ is equally refers to as ‘diabolic loop’ and the popular ‘vicious circle’.This terms from economic paradigm connotes an upward or downward harmful economic impact.
    According to IMF, “large holdings of sovereign debt expose banks to losses if government finances come under pressure and the market value of government debt declines,” Meanwhile,the Washinton lender disclose that there is a reason to worry about this connection between banks and governments. This was pointed out in the report as ‘doom loop’.Suggesting a negative spiral that can occur when “banks hold sovereign bonds and governments with weak public finances bail out such banks”.
    Appreciably, we can understand this about Nigeria’s bank credit to the government. In recent time as taking a surging flight upward. Because as at Febuary 2022 it stand at N14.9 trillion , an upsurge from the N14.2 recorded in January 2022.
    Curiously, this specifically maybe the leadoff to IMF warning about the danger of our hugely domestic borrowing and threats to economic stability.
    Although in what look like a sabotages according to IMF is that holding government bond through credit “curtail lending to companies and households, weighing on economic activity.“
    Thus, this could be a danger for a dependent market economy like ours. A situation where government have been told to hand over the economy to the private sector.
    Moreso, if we consider the popular view of IMF. With it baggage of “fundamentalist idealogy of market forces and getting the right prices’. Instructively, the economy cannot rightly be private sector driven alone. Because to get the best of any economy,argaubly rquired public sector participation. Unfortunately, there are arguments and counter arguement on this seriously. Nonetheless,the fear over
    credit to the government is believe to be counter productive.That sharply undermine investor confidence in the economy, as well as a demarket commercial banks status. For instance. banks with less capital holding government bonds in their portfolios.
    may be drone into the risk, if governments default.
    Regreattably, the ability of emerging-market governments to repay debts through up. One critical question that beg for answer.Why are emerging economies like Nigeria are so in debted to domestic banks and financial institutions?
    The answer to the above questions require deep thinking. Because economist and the likes of IMF have told us there is nothing wrong in borrowing. Nevertheless, we have seen with our own eyes, that borrowing in itself stand to jeopadize and put pressure on the economy. Reason be that it is not going to be free from condition resulting, from global financial uncertaities,interest rate spiral and weak local currency.
    Hopefully, to remedy the situation from ‘doom loop’ days. toward impactful economic growth is our take. That is, the Nigerian state in all sense of urgency must seek legislative input to enforce the economic diversification agenda. Secondly, governent at all levels must seek alternative to borrowing from domestic or foreign sources.
    They should priorites their development project with available funds and ensure accountability as well as prudency.
    Lastly, the CBN and DMO must ensure strict adherence to monetary rules guidelines. Especially to curtail excess and unwarrant bonds and credits to government.That could lead to bank stress, domestic shocks and unanticipated financial consequences. We believe the CBN using the monetary policy can normalize any negative impact of domestic debt on local banks and financial institutions.