The International Monetary Fund (IMF) has highlighted near-term downside risks resulting from Nigeria’s elevated inflation, high debt-servicing costs, external sector pressures, and oil sector volatility as the current cash crunch continues to affect business activities with a likelihood of lowering inflation rate in the short term.
According to information acquired by The Guardian, the lack of naira has actually caused food prices at important farm produce marketplaces around the nation to drop dramatically.
The IMF asserts that in order to prevent a de-anchoring of inflation expectations, there is a need for decisive and effective monetary policy tightening. It points out that higher international food and fertiliser prices as well as continued widening of the parallel market premium may lead to this outcome.
In fact, the IMF directors recommended decisive fiscal and monetary tightening in the 2022 Article IV Consultation with Nigeria in order to ensure macroeconomic stability, along with structural reforms to improve governance, support the agricultural sector, and promote inclusive and sustainable growth.
The IMF directors emphasized that the CBN’s budget funding must closely adhere to the statutory restrictions and urged the authorities to complete the securitization of the CBN’s current stock of overdrafts.
They emphasized the necessity for radical fiscal reforms to free up necessary policy space, stabilize the public debt, and lessen vulnerabilities.
They encouraged the government to expand well-targeted social spending and to fulfill its promise to terminate gasoline subsidies by the middle of 2023.
The IMF urged the government to improve tax compliance while also calling for comprehensive tax administration changes, an expansion of the tax automation system, and strengthened taxpayer segmentation.
The directors advised hiking tax rates to levels comparable to the Economic Community of West African States, rationalizing tax incentives, and modernizing the administration of the Nigeria Customs Service (NCS) in the medium term (ECOWAS).
The Guardian learned yesterday that farmers’ desperation had caused a 50% reduction in grain prices. For instance, depending on whether you are paying cash or making a transfer, the price of corn decreased from N27, 000 per bag to N13, 000 to 15,000 per bag.
In addition, the cost of soy beans in Igbeti, Oyo State, which once sold for up to N36,000 to N40,000 per bag, is now roughly N18,000.
As a bag of beans now costs N27,000 instead of N40,000, the price of beans is also declining. Guinea corn, sorghum, and millet are also available for about N12,000 each bag.
According to Abdulrasheed Ibrahim, a farmer from Oyo State, the farmers had to sell their goods to raise money for other things.
“Despite crashing prices, we cannot still sell as people do not have money to buy the produce,” he lamented.
“When customers come, they want to do a transfer but because we cannot withdraw the money from banks, we insist on cash,” he noted.
Additionally, Abdullahi, a businessman from Kano State, bemoaned the negative effects of the currency crisis.
“We are not making sales like before, customers often want to make transfers but we reject it insisting on cash. This is because I, for instance, do not have a bank account. Each time I sell, I save my profit through our society before I will use it to buy my goods. I don’t have time to go the bank.”
Farooq Mudi, the president of the All Farmers Association of Nigeria, claimed that farmers are driving down the price of their products to earn money for planting season preparations, including paying staff.
In a phone interview, Mudi claimed that farmers are selling their goods below the cost of production since they had to pay laborers and buy fertilizer. He claimed that most laborers don’t have bank accounts and prefer to work on farms where they are paid in cash.
