National planning minister Udo Udoma disagrees with IMF saying Nigeria's economy will grow by 3% in 2019

NIGERIA'S minister of budget and national planning Senator Udo Udoma has disagreed with the International Monetary Fund (IMF) over its forecasts for the Nigerian economy this year saying he believes it will grow by about 3.01% during the course of 2019.

Between 1999 and 2015, Nigeria's economy grew by an average of about 6% a year but four years ago it went into recession as institutional investors withdrew their capital amid fears that the government would prevent them repatriating their funds. Over the last year, Nigeria's economy has returned to growth of about 1.9% and the IMF has forecast that growth should be about 2% for the duration of 2019.

In its World Economic Outlook Update published last month, the IMF said that Nigeria’s economy would expand more slowly in 2019 than previously predicted against the backdrop of the recent drop in global crude oil prices. It, therefore, revised down its Gross Domestic Product (GDP) projection for the country to 2% from the 2.3% projected in October 2018.

However, Senator Udoma said he believes the nation’s economy will grow by 3.01% this year as the proposed 2019 budget was intended to further reposition the economy on the path of faster, inclusive, diversified and sustainable growth. Speaking at Deloitte Dialogue on Nigeria’s Economic Outlook for 2019, in Lagos, he added that the budget will continue to lift significant numbers of Nigerians out of poverty.

According to the minister, Nigeria's inflation rate is expected to trend downwards to 9.98% in 2019 from 11.44% as of December 2018. He said this would be possible with the improved coordination of fiscal and monetary policies, exchange rate stability, improved oil export earnings and capital inflows, as well as the continuation of the current prudent management of foreign exchange reserves by the Central Bank of Nigeria.

Senator Udoma added: “Government is committed to growing the economy and accordingly, the 2019 budget proposal has been designed to continue to provide the stimulus and support required to spur growth in the economy. Our aim is to take all measures necessary to ensure that we increase the growth rate whilst maintaining fiscal sustainability.”

He added that although the current real GDP growth performance is still a little sluggish, which is expected as the country is just recovering from the recession, it indicates a positive momentum, especially with regards to the growth of the non-oil sector. Explaining the basis for the oil price projections in the budget, the minister said oil prices would be determined by the interaction between supply and demand in international markets.

On oil production levels, the minister said that President Muhammadu Buhari had directed the Nigerian National Petroleum Corporation to work hard to achieve the budget target of 2.3m barrels per day. According to Senator Udoma, the 2019 proposed budget size is smaller than that of 2018 because of the need to contain the size of the deficit so as to keep the country’s borrowing within prudent limits.

He noted that the proposed deficit of N1.859tn in 2019 is about 1.33% of GDP, which is within the 3% threshold stipulated in the Fiscal Responsibility Act 2007. Furthermore, the minister said the government would leverage private sector capital for the development and refurbishment of road networks in industrial clusters and key economic areas in the country.