The International Monetary Fund on Monday predicted that the current high food prices in Nigeria as well as the high global energy prices may threaten the country’s economic outlook in the 2022 fiscal period.
Nigeria’s inflation has worsened to 16.82 per cent in April, up from the 15.92 per cent recorded in March.
The April inflation figure is in line with a similar increase recorded in the month of February as a result of the rise in energy prices caused by the war between Russia and Ukraine.
The ongoing conflict between Ukraine and Russia is putting pressure on local prices of food and services.
Considering that the nation depends mostly on importation for its raw materials and fuel, there are concerns about the impact on certain food items for which critical raw materials export have been curtailed.
But the IMF in its outlook also identified spending pressures within a narrow fiscal space, persisting insecurity particularly banditry and kidnapping and the forthcoming 2023 elections as other factors that may affect the performance of the economy.
The Fund said these in its Regional Economic Outlook for Sub-Sharan Africa which was presented to the public in Abuja by the IMF Resident Representative for Nigeria Ari Aisien.
The event was also attended by the Director-General of the Budget Office of the Federation Ben Akabueze and other top officials in both the public and private sectors of the Nigerian economy.
Other downside risks to the Nigerian economy, according to the IMF, are low vaccination rates, monetary tightening in advanced economies, muted foreign investment inflows and exchange rate pressures.
The IMF in the report said adequate measures are being taken to support the global economy from shocks following the outbreak of the covid-19 pandemic.
Some of these measures, according to the Fund are the $23bn Special Drawing Rights allocation, $100bn SDR rechanneling as well as a swift movement on the common framework.
Despite these interventions, Aisien while presenting the report said there are huge financing needs that would be required to boost the performance of the global economy.
According to Aisien, about $425bn would be needed to recover from the coronavirus pandemic, while between $30bn and $50bn per year would also be required for climate adaptation.
For commodity importers, the IMF Resident Representative for Nigeria said that the war in Ukraine will add between $6bn and $10bn to financing needs each year.
Speaking at the event, the DG Budget said the government is implementing series of measures to boost revenue.
While admitting that more work needed to be done particularly within the fiscal space, Akabueze said that some of the initiatives being implemented by the administration of President Muhammadu Buhari has started yielding results.