The International Monetary Fund said on Monday that Nigeria’s recovery from the impact of COVID-19 is expected to be weak and gradual under the current policies.
In its report titled ‘IMF Executive Board Concludes 2020 Article IV Consultation with Nigeria’ it stated that real GDP growth in 2021 was expected to turn positive at 1.5 per cent. The IMF also stated that the country’s real Gross Domestic Product is expected to recover to its pre-pandemic level only in 2022.
IMF stated, “Nigeria’s recovery is expected to be weak and gradual under current policies. Real GDP growth in 2021 is expected to turn positive at 1.5 per cent. Real GDP is expected to recover to its pre-pandemic level only in 2022.”
The IMF said non-oil growth was also expected to remain sluggish, reflecting inward-looking policies and regulatory uncertainties. Part of the report read, “The COVID-19 pandemic has placed Nigeria at a critical juncture.
“The country entered the crisis with falling per capita income, high inflation, and governance challenges.
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“Policy adjustments and reforms designed to shift the country from its dependence on oil and to diversify the economy toward private sector-led growth will set Nigeria on a more sustainable path to recovery.”
The report noted that Nigeria’s economy had been hit hard by the COVID-19 pandemic and following a sharp drop in oil prices and capital outflows, real GDP was estimated to have contracted by 3.2 per cent in 2020 amidst the pandemic-related lockdown.
Headline inflation rose to 14.9 per cent in November 2020, a 33-month high, reflecting core and food inflation increases emanating from supply shortages due to the lockdown effected to curb infections alongside, the land-border closure and continued import restrictions.
According to the report, the Nigerian authorities acted swiftly to adopt a pandemic-related support package equivalent to 0.3 per cent of GDP in the 2020 revised federal budget despite limited fiscal space.
It therefore stated, “External vulnerabilities due to lower oil prices and weak global demand have increased, with the current account remaining in deficit in the first half of 2021.
“In April 2020, Nigeria received IMF emergency financial assistance of $3.5bn under the Rapid Financing Instrument to help cushion the impact of the pandemic.”
The IMF was emphatic that socioeconomic conditions had deteriorated, with rising food inflation, elevated youth unemployment, mass protests in October 2020, and surveys show worsening food insecurity with a significant impact on the vulnerable.
