(Refiles to clarify attribution in paragraph 13)
* Nigeria in first recession in 25 years
* Naira overvalued by 10-20 pct -IMF
* Nigeria authorities concerned about IMF view -IMF
ABUJA, April 5 The International Monetary Fund
(IMF) warned Nigeria its economy needs urgent reform in a report
published on Wednesday that highlighted the risks to growth for
the recession-hit country and the dangers of a volatile foreign
The document, a report from IMF staff which Reuters saw an
earlier version of last month, outlines a raft of failings in
Nigeria's handling of Africa's largest economy and could affect
talks over at least $1.4 billion in international loans.
It strikes a more critical tone than the Fund's board
adopted in a statement last week, though that also said Nigeria
should lift its remaining foreign exchange restrictions and
scrap its system of multiple exchange rates.
Nigeria fell into recession in 2016, its first in 25 years,
largely due to the impact of low oil prices and militant attacks
on energy facilities in the Niger Delta oil hub. Crude sales
account for more than 90 percent of foreign exchange earnings
and two-thirds of government revenue.
The country, whose economy contracted 1.5 percent last year,
has also been plagued by a conflict with Boko Haram militants
since 2009, creating a humanitarian crisis in the northeast
which authorities are struggling to handle.
The Washington-based fund's analysis came on the same day
that Nigeria's President Muhammadu Buhari held a launch ceremony
for a flagship economic recovery plan.
But the IMF said the plan, criticised by economists for
including few concrete measures, is not enough to drag Africa's
biggest economy out of recession.
If Nigeria's economy is to recover, "much more needs to be
done", the IMF said in the staff report.
It also urged the major oil producer to introduce immediate
changes to its exchange rate policy - characterised by central
bank curbs, multiple exchange rates and an artificially high
naira valuation - or risk "a disorderly exchange rate
That naira overvaluation is "somewhere to the tune of 10 to
20 percent," Gene Leon, IMF mission chief for Nigeria, said in a
separate telephone media briefing.
Additionally, Nigeria's 2017 projections for non-oil
revenues are more optimistic than the IMF's, and authorities
need to increase tax levels to diversify its income, said Leon.
The presidency, budget and planning ministry, finance
ministry and central bank did not immediately respond to
requests for comment.
The Africa constituency executive director at the Fund said
the Nigerian authorities were concerned about the IMF staff
report's view. That director represents and speaks on behalf of
Nigerian authorities had said further measures were under
way which included the implementation of a more flexible foreign
exchange market and "maintaining tight monetary policy to
underpin price stability", according to the IMF report.
Nigeria has not asked the Fund for fiscal support but its
recommendations may influence institutional lenders ahead of the
annual spring meetings with the World Bank.
The World Bank has been in talks with Nigeria for more than
a year over an application for a loan of at least $1 billion and
the African Development Bank has $400 million on offer. But
talks have stalled over economic reforms.
(Reporting by Paul Carsten in Abuja and Alexis Akwagyiram in
Lagos; Editing by Alison Williams and Stephen Powell)