IMF Urges Immediate Action on Food Insecurity in Nigeria

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The International Monetary Fund (IMF) has highlighted the importance for Nigeria to address its food insecurity issues promptly.

Following discussions held during the 2024 Article IV Consultations with Nigeria, led by Axel Schimmelpfennig, IMF mission chief for Nigeria, the IMF emphasized the urgent need for Nigeria to prioritize addressing rising food insecurity.

Nigeria, grappling with various economic challenges including rising inflation, food inflation, forex crisis, and economic hardship, has been urged by the IMF to take immediate action to tackle these pressing issues.

Meanwhile,The IMF commended Nigeria’s decision to tighten monetary policy, recognizing its potential to help contain inflation and stabilize the economy.

During their visit to Lagos and Abuja from February 12 to 23, 2024, the IMF team met with key stakeholders, including government officials, central bank representatives, and members of various sectors, to discuss strategies for addressing Nigeria’s economic challenges.

Despite facing a challenging economic outlook, Nigeria has shown signs of progress, with economic growth strengthening in the fourth quarter of 2023. However, the IMF warns that high inflation, weakness in the national currency, and policy tightening could pose significant obstacles to further growth.

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Also,IMF welcomed the approval of effective social protection measures and government initiatives to support agriculture, such as the release of grains, seeds, and fertilizers, as well as the introduction of dry-season farming.

Furthermore, Nigeria’s recent improvements in revenue collection and oil production have been viewed positively by the IMF.

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However,In response to the IMF’s recommendations, Nigeria has approved a targeted social safety net program to provide cash transfers to vulnerable households, with plans for full implementation underway.

Statement in part “With about 8 percent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority. In this regard, staff welcomed the authorities’ approval of an effective and well-targeted social protection system. The team also welcomed the government’s release of grains, seeds, and fertilizers, as well as Nigeria’s introduction of dry-season farming.”

“Recent improvements in revenue collection and oil production are encouraging. Nigeria’s low revenue mobilization constrains the government’s ability to respond to shocks and to promote long-term development. Non-oil revenue collection improved by 0.8 percent of GDP in 2023, helped by naira depreciation. Oil production reached 1.65 million barrels per day in January as the result of enhanced security. The capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to 3 percent of GDP in 2024.”

“The recently approved targeted social safety net program that will provide cash transfers to vulnerable households needs to be fully implemented before the government can address costly, implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected.”

“The team welcomed the Monetary Policy Committee (MPC)’s decision to further tighten monetary policy. The MPC increased the policy rate by 400 basis points to 22.75 percent for a total tightening of 1,025 basis points since May 2022.”

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