The International Monetary Fund (IMF), yesterday in Washington DC, United States, declared that Nigeria’s Excess Crude Account (ECA) was not achieving the goals for which it was set up.
Speaking during a media briefing on “Regional Economic Outlook: sub-Saharan Africa”, IMF’s Director of the African Department (AFR), Abebe Selassie, said: “The concern that we have is about the ECA, because if you recall that the ECA economically was set up to save resources when oil prices are high, and to be drawn on when oil prices are low. We do not think that the ECA has been doing effectively enough jobs that way.
The poor performance of the ECA, the IMF chief said, largely influenced IMF’s decision to rank Nigeria second worst in the world in the use of Sovereign Wealth Funds.
The Bretton Wood Institution rating was based on the corporate governance and transparency scores of the sovereign wealth funds and the size of assets as a percentage of 2016 GDP of the countries considered.
Also justifying why removal of subsidy was important, Selassie said it was because the lion share of the benefit of the subsidy went to the rich people.
According to him, “If you think of the subsidy, who drives the big cars, who uses the biggest generators in Nigeria? It is not to say poor people are not going to benefit when subsidies are removed that is why our advice is that policies like subsidy removal has to be tied to social protection measures for the poorest people.
He expressed optimism that the African Continental Free Trade Agreement (AfCFTA), a trade agreement between 49 African Union member states, which aims to establish single market followed by free movement and a single-currency union, would achieve integration among member states.
“From our perspective, we think that the AfCTA will help the region integrate. It has been the dream of our leaders dating back to independence days and we think that it is a very important initiative and beyond politics, it will have a positive impact economically.
In a related development, the IMF has called on the Nigerian government to strengthen public finance management if it must decisively tackle money laundering in the country.
It said outflow of illicit funds from the country to developed nations had continued to be a great challenge to the country and its economic outlook.
Stating this during his press briefing, Selassie said the major role in minimising money laundering in Nigeria “lies with policy makers” in the country.
He said: “From the IMF side, we of course provide a lot of policy advice, and more recently, we have also introduced governance and corruption watch, as part of efforts to improve governance and tackle corruption.
He however stated that the IMF recognises President Muhammad Buhari’s effort in addressing the outflow of illicit funds in the country.