It said this was part of the conclusion of an IMF staff team led by Jesmin Rahman after conducting a virtual mission from October 30 to November 17, 2020, in the context of the 2020 Article IV Consultation with Nigeria.
The fund said the team concluded that under current policies, the outlook in Nigeria was, however, challenging.
The IMF said, “Real GDP (Gross Domestic Product) is projected to contract by 3¼% in 2020. The recovery is projected to start in 2021, with subdued growth of 1½ per cent and output recovering to its pre-pandemic level only in 2022.
“Despite an expected easing of food prices, inflation is projected to remain in double-digits and above the Central Bank of Nigeria’s target range, absent monetary policy reforms.”
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The IMF stated that following a significant decline in revenue collections from levels that were already among the lowest in the world, fiscal deficits were projected to remain elevated in the medium term.
It said there were significant downside risks to this near-term outlook arising from the uncertain course of the pandemic both globally and in Nigeria.
The IMF observed that the COVID-19 global pandemic was exacting a heavy toll on the Nigerian economy, which was already experiencing falling per capita income and double-digit inflation, with limited buffers and structural bottlenecks.
It said, “Low oil prices and sharp capital outflows have significantly increased balance of payments pressures and, together with the pandemic-related lockdown, have led to a large output contraction and increased unemployment.
“Supply shortages have pushed up headline inflation to a 30-month high.”
It said real GDP was contracting, inflation was increasing, and external vulnerabilities remained large.
The fund said major policy adjustments embracing broad market reforms were needed.
It noted that the exchange rate and monetary policy reforms, increased revenue mobilisation and structural reforms would help to unlock Nigeria’s growth potential.
