Press Release No. 04/260

Press Release: Press Statement by IMF First Deputy Managing Director Anne Krueger at the Conclusion of a Visit to Nigeria

December 4, 2004

Ms. Anne Krueger, First Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement earlier today at a news conference in Lagos:

"Good afternoon, ladies and gentlemen, and thank you for coming. I should like to make some brief opening remarks, and then I will be happy to take questions.

"This is my first visit to Nigeria as First Deputy Managing Director of the IMF and I want first to thank the authorities here for their gracious hospitality. At every stage in the planning of, and during, my visit they have been most helpful both to me and my IMF colleagues and I am very grateful to them.

"As you know, I have spent the past two days here in Lagos, where I have had several meetings with the authorities. I met this morning with President Obasanjo, and later with the Finance Minister, Dr. Okonjo-Iweala. Yesterday I had lunch with Professor Soludo, Governor of the Central Bank, and several members of the banking community. Before meeting with Professor Soludo, I had the opportunity to visit the Jama Atul Islamiyya primary school on Lagos Island yesterday morning. And this afternoon, I gave a speech here at the Lagos Business School. The text of my remarks there, along with my opening remarks at this news conference, will be published later on the IMF's website.

"My visit to Nigeria comes at an important juncture for the economy. Through its commitment to the National Economic Empowerment and Development Strategy (NEEDS), the government is creating a stable macroeconomic environment that is already laying the foundation for more rapid and sustained rates of growth and that in turn is the only means of ensuring lasting poverty reduction.

"The fruits of the government's approach are already beginning to show. The improved macroeconomic performance seen this year marks a clear break with the boom-bust policies of the past. Prudent management of the significant oil revenue windfall has helped both to stabilize the economy and to begin to address the major macroeconomic imbalances. Inflation has begun to fall, the exchange rate is more stable, and there has been a significant build-up of international reserves.

"My visit has been a brief one, but my meetings have nevertheless clearly indicated the extent of the economic challenges facing Nigeria. During my discussion with the President, he expressed concern that the country's serious infrastructure shortcomings are an impediment to growth; he believes that more finance, both internal and external, is urgently needed to remedy this. The President is especially concerned about the serious capacity constraints in energy generation.

"I told the President that we recognized the need for more infrastructure investment and I indicated that the international community is considering how to make available extra finance for Africa. In that context, I noted that sound macroeconomic policies over the medium term will be enable Nigeria to attract the extra financing it needs, both internal and external.

"It is clear from my discussions that the main challenge facing the authorities in 2005 will be to maintain fiscal prudence and continue with the program to reduce inflation further. The current budgetary proposals—which already contain significant additional spending—will require skillful management of monetary policy in order to meet the inflation targets. It will also be important to ensure that scarce resources are allocated efficiently and in line with the objectives of NEEDS.

"The sustained implementation of NEEDS—together with structural reforms, particularly in the areas of privatization, trade liberalization, foreign exchange unification and bank restructuring—will be necessary to enhance the prospects for non-oil growth and so permit poverty reduction on a large scale. The Fund supports the overall thrust and direction of the policies being pursued. As I told the President, the benefits of the reforms will continue to increase in successive years as the authorities gain credibility for their medium term strategy.

"I look forward to seeing the further fruits of reforms on my next visit to Nigeria.

"Thank you."