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IMF set to warn Nigeria on current CBN’s forex ‘cosmetology’, way out of recession

Before the end of this week, the International Monetary Fund (IMF) is expected to issue an unflattering warning embedded report on the Federal Government’s economic policies.

Key in the expected warning may include that the ongoing forex saturation policy of the Central Bank of Nigeria (CBN) is an unsustainable cosmetology after all. Also expected may include that if Nigeria did not remove foreign exchange restrictions and unify the exchange rates, it risked “further deterioration in (forex) reserves” and “disorderly exchange rate depreciation”.

The report said Nigeria should also tackle its overdependence on oil, low government revenues, a large infrastructure deficit, a rising debt service and double-digit inflation.

A report seen by Reuters weekend said IMF is expected to warn Nigeria that its economy needs urgent reform and will also urge the government to introduce immediate changes to its exchange rate policy as the forex measures recently introduced by the Central Bank of Nigeria (CBN) are not enough to drag the economy out of recession.

Reuters revealed that the awaited 68-paged report on Nigerian economy by IMF centered on; “Much more needs to be done… and further actions are urgently needed!”

The online news portal, added that the report which was written after a final meeting between IMF representatives and top government officials in Abuja was from the Fund’s Acting Secretary and addressed to members of its executive board and would form part of the IMF’s verdict expected on March 29, although Nigeria can request alterations.

Analysts say part of the damming damage that may stem for the release of the report may include a disapproval to secure the much needed loans from the World Bank and the African Development Bank (AfDB) as it would send not-too-good signal to institutions after all.

Before now, Nigeria was closing in on accessing a loan of at least $1 billion for more than a year and the AfDB has $400 million on offer, but discussions have stalled over economic reforms.

It was not clear if the warning is coming because Nigeria has not asked the IMF for fiscal support.