Front Matter Page

IMF Country Report No. 17/81

NIGERIA

SELECTED ISSUES

April 2017

This Selected Issues paper on Nigeria was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on March 14, 2017.

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Front Matter Page

NIGERIA

SELECTED ISSUES

March 14, 2017

Approved By African Department

Contents

• INTRODUCTION

• EXPLAINING THE IMPACT OF THE OIL PRICE DECLINE ON NIGERIA

• FIGURES

• 1. Real GDP Lower Than Projected

• 2. Real GDP Typically Underperformed Forecasts

• 3. Real GDP Slowdown in Oil Exporters

• 4. Reduction in Oil Exports Across Oil Exporters

• 5. Oil Dependence Does Not Explain the Shock Impact

• 6. Contributions to Oil Shock Impact

• TABLE

• 1. Oil Shock Impact: Explanatory Factors

• FOREIGN EXCHANGE AND CORPORATE PERFORMANCE

• A. Background

• B. Empirical Analysis

• C. Empirical Results

• FIGURES

• 1. Corporate Performance, 2011–15

• 2. Foreign Exchange Inflows and Rates, 2013–16

• TABLES

• 1. Chronology of Events, 2014-16 Q2

• 2. EBIT, FX Inflows, FX Exchange Rate Spread, 2013Q3-2016Q2

• 3. EBIT, FX Inflows, FX Exchange Rate Spread by Sector, 2013Q3-2016Q2

• FINANCIAL SECTOR DEVELOPMENTS AND VULNERABILITIES

• A. Banking Sector

• B. Non-Banking Financial sector

• BOXES

• 1. Major Prudential Regulations and Measures Adopted Since 2010

• 2. Methodology for Corporate Sector Stress Test

• FIGURES

• 1. Structure of the Financial System, 2013-16

• 2. Evolution of Banking Sector Credit

• 3. Deterioration in Asset Quality and Capital Adequacy Ratios

• 4. Banking Sector Sensitivity Stress Test Capital Adequacy Ratio

• 5. Corporate Sector Developments

• 6. Evolution of Corporate Sector Debt-at-Risk, 2011–15

• 7. Developments in the Non-Banking Financial Sector

• TABLE

• 1. Impact of Corporate Sector Stress Scenario on Banking Sector, 2015

• JOB-INTENSIVE GROWTH THROUGH STRENGTHENING THE BUSINESS ENVIRONMENT

• A. Labor Market Developments and Prospects

• B. Business Environment

• C. Impact of Reforms on Job Creation

• FIGURES

• 1. Economic Growth

• 2. Labor Market Indicators

• 3. Per Capita Growth Forecast

• 4. Overall Ease of Doing Business

• 5. Doing Business Subcomponents

• 6. Subnational Doing Business Indicators

• 7. Unemployment Rate Scenarios

• TABLE

• 1. Business Environment Reforms and Growth-Employment Elasticity

• SUBNATIONAL GOVERNMENTS: VULNERABILITIES AND CHALLENGES

• A. Fiscal Federalism arrangements

• B. Recent fiscal performance

• C. Subnational Challenges

• D. Options and Strategies to Cope with Future Shocks

• E. Conclusion

• FIGURES

• 1. Revenue and Expenditure Trends, 2011–16

• 2. Sharing Mechanisms of the Federation Revenue

• 3. Stylized Facts on Subnational Revenue, Expenditure, and Deficits

• 4. Stylized Facts on Subnational Debt Trends and Composition

• 5. Stylized Facts on Subnational Internally Generated Revenue, Budget Implementation, and Regional Disparities

• TABLE

• 1. Extent of Risk-Sharing Among SLGs, 2011–15

• APPENDIX

• I. Data, Bond Issuance by States, and Fiscal Sustainability Plan

• References