* IMF says further actions "urgently needed" to boost
Nigeria economy -report
* IMF urges removal of FX curbs, tighter monetary and fiscal
* Nigeria is in first recession in 25 years
* At least $1.4 billion in loans could be affected by IMF
By Paul Carsten and Alexis Akwagyiram
ABUJA, March 24 The International Monetary Fund
(IMF) is expected to warn Nigeria its economy needs urgent
reform, according to a report seen by Reuters that could delay
talks over $1.4 billion in much-needed international loans.
The Washington-based fund will urge Nigeria, a major oil
producer, to introduce immediate changes to its exchange rate
policy and say its recent reform plan is not enough to drag
Africa's biggest economy out of recession, according to the
"Much more needs to be done," the IMF said in the document,
written after a final meeting between its representatives and
top officials in the capital Abuja before the fund issues its
verdict on Nigeria's economy, expected on March 29.
"Further actions are urgently needed," it said.
The report - from the fund's acting secretary and addressed
to members of its executive board - is set to form part of the
IMF's verdict, though Nigeria can request alterations.
Three people familiar with the negotiations said it would
send an important signal to institutional lenders.
The World Bank has been in talks with Nigeria for a loan of
at least $1 billion for more than a year and the African
Development Bank (AfDB) has $400 million on offer, but
discussions have stalled over economic reforms.
"The tone of the IMF will be critical in terms of
signalling," said one of the people familiar with the
negotiations, who spoke on condition of anonymity because they
were not authorised to speak to media.
Two of the people with knowledge of the loan talks said the
lenders were unlikely to withhold funding entirely.
President Muhammadu Buhari has rejected a devaluation of the
naira currency and backed curbs imposed by the central bank that
force firms to buy dollars needed for imports for a premium on
the black market.
Nigeria has at least five exchange rates - 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
The IMF said that if Nigeria did not remove foreign exchange
restrictions and unify the exchange rates, it risked "further
deterioration in (forex) reserves" and "a disorderly exchange
The report said Nigeria should also tackle its
over-dependence on oil, low government revenues, a large
infrastructure deficit, a rising debt service and double-digit
Nigeria has not asked the IMF for fiscal support. An IMF
spokeswoman declined to comment.
A spokesman for the presidency directed inquiries to the
ministries of finance and budget and national planning. The
finance ministry and central bank did not respond to repeated
attempts to seek comment. A budget and planning ministry
spokesman declined to comment.
A World Bank spokeswoman said the lender was continuing its
discussions with Nigeria and other partners and "will determine
with the government the most appropriate lending instrument to
support the implementation" of reform plans.
The AfDB declined to comment.
Earlier this month, Nigeria released an Economic Recovery
and Growth Plan (ERGP) for 2017 to 2020 calling for a
market-determined exchange rate. But it offers few concrete
The ERGP "is more optimistic on growth than (IMF) staff...
does not explicitly call for tighter monetary and fiscal policy
in the near term, and assumes no immediate change in exchange
rate policy - all of which are essential to reduce
vulnerabilities and increase investors' interest," said the IMF.
Delays in adopting these policies increase vulnerabilities
and risk reforms being politicised ahead of the 2019 elections,
the IMF said.
Adoption of a fully flexible exchange rate would likely see
the naira, which is propped up by the central bank but trades
around 30 percent weaker on the parallel market, plummet in
Buhari, a 74-year-old former military ruler who led the
country for 20 months in the 1980s, resisted pressure from the
IMF and World Bank to devalue the naira in his previous tenure
before being deposed in a coup.
Two of the people with knowledge of the negotiations said
even without the IMF's proposed reforms, the World Bank and AfDB
were likely to offer the loans to Nigeria.
"There might be some eye-rolling but then they'll still go
through with the loans," said one, a diplomat, adding that the
World Bank could offer its money in tranches as a way of holding
back and enforcing reforms.
The report said Nigeria should articulate a sustainable
fiscal policy and adopt structural reforms to diversify the
economy away from its dependence on oil and promote
"The outlook is challenging, with growth expected to remain
flat and macroeconomic imbalances to persist," it said.
(Reporting by Paul Carsten and Alexis Akwagyiram; Additional
reporting by David Lawder in Washington and Felix Onuah in
Abuja; Editing by Ulf Laessing and Philippa Fletcher)