Borrow $30bn From IMF To Save Nigeria’s Economy, Ex-CBN Deputy Governor, Moghalu Advises FG

The Chairman of Africa Private Sector Summit and former Deputy Governor of the Central Bank of Nigeria, Professor Kingsley Moghalu has said that Nigeria needs to either issue N20trn bond or take a $20bn loan from the International Monetary Fund to resurrect the economy.

Moghalu said the loan recommendation is part of the solutions the government can adopt to rescue the failing currency and ameliorate the hardship induced on Nigerians by the policies of the Bola Tinubu-led administration.

Since 2020, the IMF had advised the Nigerian government to float its currency and remove fuel subsidy which gulped billions of dollars annually.

Last year, the government heeded the advice and removed subsidy on petrol as well as floated the naira.

As part of the 2024 Article IV Consultations, the IMF had also told the government to remove subsidy on power.

Although the government has returned to weekly intervention to defend the naira which traded over N1,900 per dollar last month, Moghalu said the government has respected the recommendations of the IMF.

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The professor suggested two funding options for the federal government.

He said, “Nigeria can consider floating or issuing a N20trn bond to finance some projects in railways, in housing, in agriculture that will be nationwide across the 36 states using land as a resource and as the backup for that issue, and creating five million jobs within three years. That’s one possibility.”

According to him, the government could explore the option of borrowing from the IMF.

Moghalu said, “Another possibility, which is not homegrown, but it’s also valid, is that we can consider taking a $30bn IMF stabilization program. I know, even though the IMF may be a dirty word in Nigeria, you’re already doing most of the things they want.

“You’re removing subsidies, people are suffering, there’s anger, there’s hunger in the land, and you’re not getting any inflows that are significant because there is no confidence. Investor confidence has gone from Nigeria, and when investor sentiment disappears, it takes a lot of time and a lot of hard work to bring it back.

“You might as well get the cash if you’re taking all this pain. And I discussed the pros and the cons of taking an IMF facility. But for you to take an IMF facility, it must be a big fish.”

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The expert believes that taking the usual $2bn loan from the IMF would be a waste of time.

He said “If it’s not a big fish, you’re wasting your time. If Nigeria takes anything less than $20bn, ideally $30bn, they will be like a drop in the bucket. So, the advantage is that you get forex liquidity, you get support for your reserves, and you get improved investor sentiment automatically.

“If you go into an IMF program, investors will return, because they know that there is a factor that they trust that is now in play. And then third, there will be a bit more transparency in our fiscal management because of the conditionalities that go with that.”

But President Tinubu at the 16th annual Leadership Conference and Awards 2023, had dismissed claims that the economy is in distress.