Finance Minister Edun has ruled out IMF loans, citing Nigeria’s positive trade balance, growing reserves, and cheaper borrowing alternatives.
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Thursday explained why Nigeria has no reason to approach the global lender, the International Monetary Fund (IMF), for any loans, contrary to insinuations that the country could seek help from the Bretton Woods institution soon.
Besides, the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, on Thursday, disclosed that the bank was set to establish a compliance department by February to address past challenges, aligning with global standards, and building a more transparent and resilient financial sector.
These came on a day the global consulting firm, PricewaterhouseCoopers (PwC), projected a 3.3 per cent growth for the Nigerian economy, driven by sustained policy reforms in 2025.
The firm also predicted a relatively stable economy marked by exchange rate stability supported by the CBN reforms in the FX segment which are expected to boost capital inflows.
But speaking with Arise Television on the sidelines of the ongoing World Economic Forum (WEF) in Davos, Switzerland, Edun explained that Nigeria is currently relying on relatively cheaper borrowing sources from the World Bank and the African Development Bank (AfDB).
Besides, he argued that Nigeria does not have a balance of payments problem and therefore will not need the short-term financing intervention by the international bank.
“I can imagine the headlines if you saw a situation whereby you were saying Nigeria approaches the IMF for funding. But the reality is that, of course, as a developing country, requiring investment, requiring funds for the government, for investment in key infrastructure to improve the enabling environment for business, we do need funds, and we have the need to borrow.
“We have relied on relatively cheap funding from the multilaterals, from the World Bank, from AFDB, and the whole spectrum of funding has been used. We have relied on Nigerian savings by convincing them of the macroeconomic plan of the president, and what it holds in terms of the prospects for growth of the economy and business, and improvement of the business environment.
“And, of course, we have approached the Euro bond market, which is, of course, the commercial end of financing. So we’ve done that whole spectrum. When it comes to IMF financing, typically financing from the IMF is to help with short-term balance of payments issues and crises.
“In the case of Nigeria, we have a positive trade balance. We have a positive current account balance. Our reserves are growing. The Governor of the Central Bank recently announced that we had achieved upwards of $10 billion improvement and increase in the reserves.
“ In such a case, funding by the IMF is not the appropriate source. And where we are now is that having utilised multilateral financing, concessional financing as much as possible, now we need to optimise our assets.
“We need to use equity. We need to rely on crowding in the savings, particularly of the private sector in Nigeria and the private sector around the world in the form of foreign direct investment. We have to remember that at this time, we have had significant gains in terms of improving the economic environment,” Edun stated.
However, he admitted that food inflation and the cost of living remain in the high side, explaining that beyond restricting demand to cut inflation, the supply side also needs to be boosted.
“However, we also admit and we confront fully the fact that inflation is relatively high. Cost of living is high. Cost of food is high. And that is the the focus of Mr. President’s determination in terms of what to tackle next. It is the high rate of inflation, of course, led by the Central Bank, which controls the monetary tools, interest rates in particular. But also, inflation is not just for the monetary side.
“Inflation is a fight for all of us. And on the fiscal side, there is much to be done in increasing the supply. If you want the price of a good to go down, it’s not just a question of restricting demand.
“It’s also a question of increasing supply. And in particular, as has happened during this dry season harvest, which is going on in Nigeria, with concerted efforts to provide the smallholders in particular with the various inputs, herbicides, fertiliser, seeds, we are having a good harvest, but more needs to be done there.
“And there’s a commitment to increasing food production, so achieving lower price of food, more availability and affordability of food for Nigerians, that is a major commitment, alongside growing the economy as a whole,” Edun pointed out.
The minister argued that Nigeria was gradually turning the corner, stressing that the economy of last year is different from the one this year, because the needed reforms have been largely implemented and we’re beginning to yield results.
“The economy is growing again. The foreign reserves are building up. The debt servicing as a percentage of revenue is down, and likewise, also the deficit, debt as a percentage of Gross Domestic Product (GDP) is going down. So we’re in a much better place in terms of the investment environment,” the minister added.
