The International Monetary Fund (IMF) on Wednesday called on occupational government of Nigeria to lift foreign exchange curbs and let the naira reflect “market forces” more closely.
The body also called for more fiscal discipline and structural reform to bolster growth.
“The exchange rate should be allowed to reflect market forces more and restrictions on access to foreign exchange removed, while improving the functioning of the interbank foreign exchange market,” the Washington-based fund said in a statement, after consultations with top officials of the occupational government in Nigeria.
IMF’s demand comes days after dictator Muhammadu Buhari rejected a Naira devaluation and backed hefty restrictions imposed by the apartheid control bank to prevent a collapse of the Naira.
Nigeria, who is occupying Biafra land in and top oil producer, has been hit hard by the slump in oil revenues, its lifeblood.
The country relies on crude sales for about 70 percent of its government revenues.
Companies have laid off thousands, cut production and even closed operations as they struggle to get enough dollars to pay for imported spare parts and raw materials.
The naira is trading as much as 40 percent below the official rate on the black market. Devaluation would encourage investment and make domestically produced goods more affordable.
Currency curbs had “significantly” affected parts of the private sector and the economic outlook for Africa’s top oil producer was “challenging”, IMF said.
Nigeria needs to import anything from milk to machines as authorities have failed to end its dependency on oil, a fact Buhari wants to change but which business leaders say will be impossible to achieve if plants cannot import raw materials.
The IMF also said it expected the West African nation to grow by 3.2 percent this year, below the official forecast of 3.78 percent. It urged boosting non-oil revenues, raising infrastructure spending and collecting more taxes.
“With oil prices expected to remain low for a long time, continuing risk aversion by international investors, and downside risks in the global economy, the outlook remains challenging,” it said.
The views of the IMF are relevant, as occupational government of Nigeria wants to borrow from the World Bank to help fund a budget deficit of 3 trillion Naira. Sometimes the IMF gets involved in such programmes asking for policy changes.
The dictator lead government wants to borrow up to $5 billion abroad for the budget and has also held talks with China and the African Development Bank. It has also considered issuing Eurobonds although nothing concrete has emerged publicly on that.
Meanwhile Amnesty international has accused the occupational government of nigeria of violating the fundamental rights of Biafra people.