CPPE Reacts to IMF Report, Advocates Policy Stability for Growth

• The IMF has released its assessment on Nigeria’s reforms, citing gains in exchange rate stability, reserves
• CPPE, a think tank group, has commented on the assessment but noted the need for macroeconomic stability
• The group called for inclusive growth, lower interest rates, and stronger investment in agriculture

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Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Centre for the Promotion of Private Enterprise (CPPE) has described the International Monetary Fund's (IMF) Article IV Consultation Report on Nigeria as an "objective assessment" of the ongoing reform in the country, but stressed that a strong policy balance is needed to ensure reforms translate into welfare gains for citizens.

A statement by Muda Yusuf, Chief Executive Officer of CPPE made available to Legit.ng noted that the IMF's assessment of economic reforms in Nigeria was in line with its own, that current policies had helped to achieve macroeconomic stability in Africa's largest economy.

CPPE assessment of IMF report

It added that the reforms resulted in stable forex markets, improved external sector position, an increase in investor confidence and renewed policy credibility.

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CPPE said:

"The fall in exchange rate volatility, rise in foreign reserves, increased capital flows and increased corporate earnings are evidence of macroeconomic stability in the country following years of distortions."

CPPE, however, maintained that macroeconomic stabilisation must now be translated to improved standards of living, adding that performance should be measured not only by the indicators, but by improvements in standards of living, fall in the level of poverty, price of food items, creation of jobs and income levels.

It stressed:

"Citzens welfare outcome is the ultimate yardstick of reforms".

The group said that efforts should now be channelled towards the next phase of policy aimed at securing inclusive growth and shared prosperity.

Interest rate concerns

CPPE also expressed concerns about the impact of a tight Monetary policy regime, specifically the high interest rate, which he said has made borrowing too expensive for firms, leading to constrained investment and employment.

According to the group, high yields in the government securities drive investments of banks and other investors into "risk-free assets"

It explained that this crowds out investment in the productive sectors, which could consequently slow down the growth of the manufacturing sector.

The think tank believes development finance remains significant in Nigeria as institutional constraints limit the access to and cheap availability of long-term credits in key sectors like agriculture, manufacturing and infrastructure.

It believes a market-based financing model will leave productive sectors under-financed and hence require "development finance intervention to support productivity and economic transformation", Punch reports.

Debt servicing

On public finance, CPPE notes that high interest rates have raised debt servicing costs, reducing fiscal resources to spend on investment in infrastructure, health and education.

While it welcomed government plans to refinance a part of the debt portfolio that could ease fiscal burden, CPPE stressed that overdependence on foreign portfolio capital, which is speculative and sensitive to global sentiments, should be moderated.

CPPE, however advocate increased emphasis on export, FDI and domestic productivity.

Cash transfer programme

CPPE, however, questions the efficacy of the cash transfer program as the primary policy to poverty reduction, adding that expenditure directly channelled into investment in infrastructure, education and health would provide a more durable contribution to livelihood.

It called for coordinated efforts from the three tiers of government are also crucial to achieving Nigeria's economic transformation.

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