The International Monetary Fund, IMF, Wednesday, said the Nigerian currency, the Naira, is overvalued to the tune of 10 to 20 per cent.
Gene Leon, IMF mission chief for Nigeria, made this known in a separate telephone media briefing Wednesday afternoon.
Reuters news agency quoted Mr. Leon as saying that the naira overvaluation is “somewhere to the tune of 10 to 20 per cent.”
Additionally, the IMF boss disclosed that Nigeria’s 2017 projections for non-oil revenues are more optimistic than the IMF’s, and authorities need to increase tax levels to diversify its income.
The Washington-based agency had earlier warned Nigeria that its economy needs urgent reform.
A document, whose earlier version was obtained by Reuters last month, outlines a raft of failings in Nigeria’s handling of its economy and could affect talks over at least $1.4 billion in international loans.
Nigeria fell into recession in 2016, its first in 25 years, largely due to the impact of low oil prices and militant attacks on energy facilities in the Niger Delta region.
For Africa’s largest economy, crude sales account for more than 90 percent of foreign exchange earnings and two-thirds of government revenue.
PREMIUM TIMES had reported earlier on Wednesday that President Muhammadu Buhari held a launch ceremony for a flagship economic recovery plan.
But the IMF said the plan, criticised by economists for including few concrete measures, is not enough to drag Africa’s biggest economy out of recession.
If Nigeria’s economy is to recover, “much more needs to be done”, the IMF said in the report.
It also urged the major oil producer to introduce immediate changes to its exchange rate policy – characterised by central bank curbs, multiple exchange rates and an artificially high naira valuation – or risk “a disorderly exchange rate depreciation”.
The World Bank has been in talks with Nigeria for more than a year over an application for a loan of at least $1 billion and the African Development Bank has $400 million on offer. But talks have stalled over economic reforms.
Nigeria has not asked the fund for fiscal support but its recommendations may influence institutional lenders ahead of the annual spring meetings with the World Bank.
WATCH: Governor Yahaya Bello's Roadmap to Hope 2023