LAGOS, Nigeria â€” The head of the International Monetary Fund on Tuesday advised Nigerian leaders to build up resistance in the face of Europeâ€™s escalating debt crisis, as officials in the oil-rich nation pushed a proposal to remove oil subsidies that they say will save billions of dollars.
IMF Managing Director Christine Lagarde advised officials to keep reserves and build their resistance to shocks, and pointed to the countryâ€™s success in weathering previous global crises. She said she expects global average growth to drop further in January.
Lagarde did not mention the proposal to end oil subsidies. However, she lent support to the reforms that Nigeriaâ€™s economic team is pursuing and stressed the need to create fiscal space to cope with shocks.
She spoke to a room of top economic officials, business people and financial analysts at a round-table discussion held at a prestigious Lagos hotel. Other participants included Finance Minister Ngozi Okonjo-Iweala and Central Bank Governor Lamido Sanusi. Both are respected technocrats who have pushed for the highly unpopular move to lift subsidies, which authorities say the oil-rich West African can no longer afford.
The government says the move will also make funds available for much-needed infrastructure projects, but previous attempts to lift the subsidies have been met with nationwide strike actions. Nigeria is a top producer of crude, but virtually all of its petroleum products are imported after years of graft, mismanagement and violence at its refineries.
In a country where people see little benefit from the countryâ€™s staggering oil wealth, a culture of distrust has come to define the relationship between the Nigerian people and their government.
â€œOver and over, promises have been broken,â€ said Okonjo-Iweala, a former World Bank official. â€œOver and over, they have not seen the implementation they want take place … This is different.â€
But the IMF also suffers from the distrust of the Nigerian people, many of whom still blame the institution for advice that inflicted hardship in the 1980s, when the prices of basic goods skyrocketed, sometimes by as much as 400 per cent.
â€œWeâ€™re not here to dictate,â€ said Lagarde. â€œWeâ€™re not here to prescribe.â€
Instead, the IMF wants to give more technical help â€œwhen askedâ€ to support growth that will create jobs in Africa, said Lagarde, whose organization runs programs in 23 African nations, but not in Nigeria.
Lagarde also gave a nod of approval to the economic team that has dared to deal with the political hot potato that is the oil subsidy removal.
â€œIt is unpopular, but absolutely necessary and in the interest of the Nigerian economy,â€ said Sanusi, who Lagarde described as â€œthe most intelligent man in the country.â€
Lagardeâ€™s Africa trip also will take her to neighboring Niger.