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updated 10:20 AM UTC, Dec 13, 2023

Economic Troubles In Nigeria Caused By Government Inefficiency, Says IMF

Unic Press UK: The International Monetary Fund (IMF) says the severe economic predicament in Nigeria is the ‘product’ of government inefficiency. This is one of the key findings stated in the IMF Policy Paper “Macroeconomic Developments And Prospects In Low Income Developing Countries—2016”. This policy paper is one in a series of publications used by the monetary body for assessing macroeconomic developments and the prospects in low-income developing countries (LIDCs).

The issues that had a serious negative impact on the Nigerian economy in 2016, which were identified/published in the “Macroeconomic Developments And Prospects In Low Income Developing Countries—2016”, included:

  • Bad foreign exchange policy, particularly foreign exchange rationing that adversely affected debt service capacity of many corporate bodies.
  • Disruptions to oil production in the Niger Delta province, including damage on oil infrastructure.
  • Insurgency: Boko Haram-led attacks in the northern region. Boko Haram is a Jihadi terrorist group.
  • Excessive security outlays triggered by armed conflicts that undermine economic activities and business confidence.
  • “Delayed/poorly managed policy adjustment to lower commodity prices”.

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The rate of inflation in Nigeria hit 18.55% in December 2016, says the country’s National Bureau of Statistics (NBS).

The NBS in its report “Price Statistics No. 561 December 2016” said:

“The Consumer Price Index (CPI) which measures inflation increased by 18.55 percent (year-on-year) in December 2016, 0.07 percent points higher from the rate recorded in November (18.48 percent). Increases were recorded in all COICOP divisions that yield the Headline Index. Communication and Restaurants and Hotels recorded the slowest pace of growth in December, growing at 5.33 percent and 8.91 percent (year-on-year) respectively. The Food Index rose by 17.39 percent (year-on-year) in December 2016, up by 0.20 percent points from rate recorded in November (17.19) percent. During the month, all major food sub-indexes increased, with Soft Drinks recording the slowest pace of increase at 7.66 percent (year on year). Price movements recorded by All Items less farm produce or Core sub-index rose by 18.10 percent (year-onyear) in December, down by 0.10 percent points from rate recorded in November (18.20) percent. During the month, the highest increases were seen in Housing, Water, Electricity, Gas and Other Fuels, Clothing and Footwear and Education, growing at 27.27, 21.62 and 17.84 percent respectively. On a month-on-month basis, the Headline index rose by 1.06 percent point in December, higher from the rate recorded in November (0.78) percent.”

In November 2016, the rate of inflation was 18.48%. In October 2016 it peaked at 18.3%. The rising trend in inflation rate and other negative indices like depreciating Naira, do not foster business confidence.

 

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