The International Monetary Fund urged Nigeria on Thursday to lift its remaining foreign exchange restrictions and scrap its system of multiple exchange rates in order to revive its economy, which is in its first recession in 25 years.
The recommendation came in the Washington-based Fund’s regular assessment of the country’s economy. A staff report, an accompanying document seen by Reuters and addressed to the IMF’s executive board, outlined a raft of failings in Nigeria‘s handling of its economy.
Nigeria fell into recession last year largely due to the impact of low oil prices and militant attacks on energy facilities in the Niger Delta oil hub. Crude sales account for more than 90 percent of foreign exchange earnings and two-thirds of government revenue.
President Muhammadu Buhari has rejected a devaluation of the naira currency and backed restrictions imposed by the central bank that force firms to buy dollars needed for imports for a premium on the black market, where the currency trades around 30 percent weaker than the official exchange rate.
The fund said its directors “urged the authorities to remove the remaining restrictions and multiple currency practices, thus unifying the foreign exchange market and helping regain investor confidence”.
Nigeria, Africa’s most populous country, has at least five exchange rates which include the official one, a rate for Muslim pilgrims travelling to Saudi Arabia, one for school fees abroad and a retail rate set by licensed exchange bureaux.
The IMF’s verdict comes weeks after the budget ministry published its Economic Recovery and Growth Plan for 2017 to 2020 which called for a market-determined exchange rate. However, the plan offers few concrete steps.