Copyright
© 1997 International Monetary Fund
Library of Congress Cataloging-in-Publication Data
Moser, Gary G. (Gary Gene), 1958-
Nigeria: experience with structural adjustment / Gary Moser, Scott Rogers, and Reinold van Til with Robin Kibuka and Inutu Lukonga.
p. cm. — (Occasional paper, ISSN 0251-6365; no. 148)
Includes bibliographical references (p.)
ISBN 9781557756305
1. Structural adjustment (Economic policy)—Nigeria. 2. Finance Public—Nigeria. 3. Nigeria—Economic conditions—1970 – I. Rogers, Scott, 1955-. II. Til, Reinold H. van. III. Title. IV. Series: Occasional paper (International Monetary Fund); no. 148.
HC1055.M68 1997
338.9669—dc21 97-1966 CIP
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Contents
Preface
Map
I Introduction
II Economic and Political Setting
III Austerity and Controls in the First Half of the 1980s
IV Structural Reform and Macroeconomic Policy, 1986–90
Price Liberalization and Subsidy Policy
Reform of the Exchange Rate
Trade and Tariff Reform
External Debt Policy
Paris Club Agreements
London Club Agreements
Fiscal Adjustment and Reform
State and Local Government Finances
Monetary Policy and Financial Sector Reform
Credit Controls
Interest Rate Policy
Financial Intermediation
Public Enterprise Reform
V Adjustment and Growth, 1986–90
Sectoral Growth
Savings and Investment
Inflation
External Sector
Employment and Wages
VI Post-Adjustment Decline, 1991–94
Fiscal Deterioration
Monetary Expansion and Interest Rates
Foreign Exchange Market
Domestic Petroleum Prices
Privatization
VII Concluding Observations
Appendices
Determinants of Inflation in Nigeria
Money Demand in Nigeria, 1970–94
Nigeria’s Non-Oil Exports: Determinants of Supply and Demand, 1970–90
Oil Smuggling, Fiscal Policy, and Macroeconomic Imbalances
Statistical Appendix
Boxes
Section
II
1. Nigeria’s Resource Endowment
2. Nigeria’s Regional Importance
IV
3. Experience with Fund-Supported Programs
4. Fiscal Federalism
5. Measuring the Stance of Fiscal Policy in an Oil Economy
6. Oil Revenue in Nigeria
IV
7. Main Determinants of Inflation
8. Macroeconomic Policies and Growth: A Quantitative Analysis, 1980–94
9. Inefficient Public Investment
VI
10. Monetary Policy Targets and Outcomes
Tables
Section
II
1. Social Indicators
2. Selected Economic and Financial Indicators, 1970–80
III
3. Selected Economic and Financial Indicators, 1980–85
IV
4. Structural Reforms and Policy Implementation
5. Summary of Federal Government Fiscal Operations
6. Structure of Federal Government Expenditures
7. Monetary Targets and Outcomes
8. Credit Guidelines for Commercial Banks
V
9. Selected Economic and Financial Indicators, 1986–90
10. Farm Profitability Under the Structural Adjustment Program
11. Savings and Investment
VI
12. Selected Economic and Financial Indicators, 1990–94
Appendix
I
13. Consumer Price Index Market Basket
14. Matrix of Factors Influencing Inflation
15. Selected Price, Money, and Exchange Rate Indicators
16. Inflation Database
II
17. Long-Run Real Money Demand
18. Short-Run Real Money Demand
19. Database
III
20. Comparative Growth Rates of Selected Commodities
21. Equilibrium Model, Export Supply Elasticities for Selected Export Crops
22. Disequilibrium Model, Export Supply Elasticities for Selected Export Crops
23. Average Time Lags
IV
24. Retail Prices of Premium Gasoline in Nigeria and Neighboring Countries
25. Composition of Retail Prices of Premium Gasoline in Selected CFAF Countries, 1991
V
26. Selected Economic and Financial Indicators
27. Federal Government Fiscal Operations
28. Summary of Budgetary Operations of State and Local Governments and Special Funds
29. Consolidated General Government Fiscal Operations
30. Monetary Survey
31. Balance of Payments
32. Stock of Public and Publicly Guaranteed Debt
33. Domestic Petroleum Prices
34. Gross Domestic Product by Sector of Origin at Current Prices
35. Gross Domestic Product by Sector of Origin at Constant 1984 Prices
36. Gross National Expenditure
37. Index of Agricultural Production
38. Index of Manufacturing Production
39. Non-Oil Exports, 1970–80
40. Non-Oil Exports, 1981–90
41. Structure of Exports, 1970–80
42. Structure of Exports, 1981–90
43. Structure of Non-Oil Exports, 1970–80
44. Structure of Non-Oil Exports, 1981–90
45. Agricultural Exports—Selected Indicators, 1970–80
46. Agricultural Exports—Selected Indicators, 1981–90
47. Export Volumes, Export Prices, Consumer Price Index, GDP at Factor Cost, and Index of Manufacturing
48. Selected Financial Institutions
Figures
Section
III
1. Selected Economic Indicators
IV
2. Domestic Gasoline Prices,
3. Exchange Rate Developments
4. Selected Interest Rates
5. Financial Intermediation
V
6. Developments in the Real Sector
7. Manufacturing and Agricultural Output
8. Capacity Utilization Rates
9. Federal Government Savings and Investment
10. Inflation, Money, and Exchange Rate Developments
11. External Sector Developments
12. Quarterly National Unemployment Rates
VI
13. Selected Economic Indicators
Appendix
I
14. Consumer Prices
15. Inflation, Money, and Exchange Rate Developments
16. Acual and Fitted Inflation
17. Structural Stability of Price Equation
18. Dynamic Response of Inflation
II
19. Actual and Fitted Money Demand
20. Dynamic Response of Broad Money
21. Dynamic Response of Narrow Money
III
22. Structure of Non-Oil Exports
23. Developments in Non-Oil Exports
IV
24. Retail Gasoline Prices
The following symbols have been used throughout this paper:
… to indicate that data are not available;
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (e.g., 1991–92 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 1991/92) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
Preface
This paper originated as part of the country work on Nigeria during the 1993–95 period. Some of the material was prepared as background for the 1994 Article IV consultation. The authors would like to thank Jean Claude Nachega for research assistance, Janet Bungay for editorial assistance, and Vera Da Luz for secretarial assistance. The authors are also grateful to David Driscoll of the External Relations Department, who edited the paper for publication and coordinated production. The views expressed here are the sole responsibility of the authors, and do not necessarily reflect the opinions of the Government of Nigeria or the Executive Directors of the IMF. The study was completed in May 1996.
