Christine Lagarde, the president of the International Monetary Fund (IMF) has slammed President Muhammadu Buhari’s policy on pegging the Naira and the on foreign exchange in the country.
In a question-and-answer session with journalists on emerging market economies, held on Thursday, February 4, 2016 in Washington DC, Lagarde who was a guest of the Nigerian government in January said that Nigeria’s fiscal policy needed to “sensible”.
In the web briefing with journalists from around the world, Largard was asked on the prospect of Nigeria getting IMF financing. “What is the likelihood that Azerbaijan and Nigeria will need IMF loans? Madame Lagarde, you have said that these countries worry you, given their heavy reliance on oil. So, again, what is the prospect of IMF financing,” the anchor asked.
In addressing the question, the IMF boss drew a contrast between Azerbaijan and Nigeria praising the former and slamming the redundant policies of the later. She took aim at our foreign exchange policy and monetary policy which President Buhari has declared he is the personally in-charge off. “I will not murder the Naira,” he told the BBC in London last week. “I am yet to be convinced on devaluing the Naira.”
Lagarde replied, “The IMF remains available to all its members, so the moment we are asked to help, we’ll do the best we can to help. Both countries, Azerbaijan and Nigeria, have been hard hit by the oil price decline shock, because their economies depended heavily on oil exports, both in terms of trade, and in terms also of revenue. When you lose a lot of that, because the price decline was about 70 percent, then clearly it puts the economy under shock.
“Policies adopted by the two are different. Azerbaijan has certainly taken a good fiscal approach, is reassessing spending, is really trying to restore its position, and it’s also using the exchange rate as a buffer.
“Nigeria is not there, and we certainly hope that in terms of identification of fiscal resources, removal of oil subsidies, an exchange rate policy that is sensible, in the sense that it is not going to waste reserves, we have in particular indicated that a persistent pegging of the naira would not be such a good idea.
“So, they have to adopt their policies, they have to adopt their model, and if they need IMF’s help, we’ll be ready to help. No question about that, and no stigma associated with it. They are clearly victim of an external shock, and they have to face a response, which is a national response to that situation,” the IMF concluded.