Nigeria: Staff Report for the 2012 Article IV Consultation—Informational Annex
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International Monetary Fund. African Dept.
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The overarching policy challenge facing Nigeria is to reduce widespread poverty and unemployment. Macroeconomic performance was broadly positive, underpinned by buoyant international oil prices and prudent fiscal and monetary policies. The fiscal targets and the medium-term fiscal consolidation plan are consistent with supporting macroeconomic stability and creating fiscal space for much needed additional investment and social spending. Non-oil revenues need to be mobilized by moving quickly to improve tax administration in line with technical assistance (TA) recommendations. Planned structural reforms can substantially boost prospects for inclusive growth.

Abstract

The overarching policy challenge facing Nigeria is to reduce widespread poverty and unemployment. Macroeconomic performance was broadly positive, underpinned by buoyant international oil prices and prudent fiscal and monetary policies. The fiscal targets and the medium-term fiscal consolidation plan are consistent with supporting macroeconomic stability and creating fiscal space for much needed additional investment and social spending. Non-oil revenues need to be mobilized by moving quickly to improve tax administration in line with technical assistance (TA) recommendations. Planned structural reforms can substantially boost prospects for inclusive growth.

Relations with the Fund

(As of November 30, 2012)

I. Membership Status: Joined: March 30, 1961; Article XIV

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans: None

V. Latest Financial Arrangements:

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VI. Projected Payments to Fund 1/

(SDR Million; based on existing use of resources and present holdings of SDRs):

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When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

VII. Implementation of HIPC Initiative: Not Applicable

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

IX. Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

X. Exchange Rate Arrangement

The de jure exchange rate arrangement is other managed arrangement. The CBN explicitly aims to maintain an exchange rate fundamentally driven by market forces but intervenes to reduce volatility and to counteract speculative attacks on the national currency. In recent years it has maintained an exchange rate band vis-à-vis the US dollar and has recently allowed adjustment of the band’s mid-point in response to market forces. The de facto exchange rate arrangement is also other managed arrangement. In spite of some stability of the Naira-US dollar exchange rate, the nominal effective exchange rate has fluctuated considerably in recent years. The CBN publishes information on its interventions through auctions on its website; however, data on interventions in the interbank market are not disseminated. Nigeria participates in the W-ERM II of the WAMZ, which requires that the spot exchange rate between the naira and the U.S. dollar be maintained within ±15% around the central rate. The CBN has not implemented this regime.

XI. Safeguards Assessment

Under the Fund’s safeguards assessment policy, the Central Bank of Nigeria (CBN) was subject to a full safeguards assessment with respect to the Stand-By Arrangement that expired on October 31, 2001. The assessment, which included an on-site visit, was completed on November 28, 2001. The assessment concluded that vulnerabilities existed in the areas of financial reporting and legal structure of the Central Bank.

XII. Article IV Consultation

Nigeria is on the standard 12-month Article IV consultation cycle. The previous Article IV consultation was concluded on February 11, 2011.

XIII. Technical Assistance (TA) since January 2003:

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XIV. Resident Representative:

Mr. W. Scott Rogers is the IMF’s Senior Resident Representative in Abuja since August 2010.

Joint World Bank-IMF Work Program, 2012–13

(As of December 31, 2012)

The IMF and World Bank staffs collaborate closely in their work on Nigeria. Bank staff participates in IMF missions, while the Bank’s analysis and advice to the government in key structural reform areas informs Fund surveillance. Bank and IMF staffs collaborated on assistance related to the Petroleum Industry Bill, FSAP update and financial sector deepening, and public financial management reform.

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Statistical Issues

(As of December 30, 2012)

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Table of Common Indicators Required for Surveillance

(As of end-December 2012)

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments. However, the expenditure data for state and local governments are not available.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

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