Selasie: Nigeria needs holistic reforms for economic stability

Nigeria is facing macroeconomic challenges caused by inadequate tax revenues, which are impacting its economic stability. Abebe Selassie, the Director of the African Department at the International Monetary Fund, emphasized the need for holistic reforms to address these issues. Speaking at a press conference during the ongoing IMF World Bank Annual meetings in Marakech, Selassie highlighted the importance of attracting African private sector players in climate financing to support the country's economic development. Selassie acknowledged the challenges facing African businesses in transitioning towards climate-friendly initiatives, citing issues with funding and capacity. The IMF is working on leveraging private finance through the Resilience and Sustainability Trust to support countries in sub-Saharan Africa. Selassie mentioned that there are six programs in place, with a focus on attracting external as well as domestic investors for climate projects. While discussing Nigeria specifically, Selassie pointed out the country's high debt pressures, largely due to insufficient tax revenues. He highlighted the over-reliance on oil revenues and the subsidy regime as key factors contributing to Nigeria's fiscal challenges. Selassie also mentioned that government's difficulty in tapping international capital markets has led to increased reliance on domestic financing, affecting the private sector and weakening the exchange rate. Selassie emphasized the need for a comprehensive approach to reforms in Nigeria, mentioning positive steps taken in recent months such as exchange rate unification and fuel subsidy reforms. However, he stressed that these measures need to be part of a holistic package that includes tightening monetary policy and mobilizing more tax revenues to be effective. Selassie expressed optimism towards the new administration in Nigeria, highlighting the recent appointments of the central bank governor and the minister of finance, and urged for patience and support as they work towards economic stability. In conclusion, Selassie called for coordinated efforts and cohesive reforms to reinforce each other and unlock Nigeria's incredible potential.