Business IMF Raises Serious Concerns About Nigerian Banks

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LequteMan

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According to Managing Director of the International Monetary Fund, IMF, Nigerian banks are at a great risk.

She warned that the prevailing uncertainty in the oil and gas industry could plunge the Nigerian financial system into crisis.

“Growth in 2015 is estimated at about 3.2 percent, its slowest pace since 1999, and only a modest recovery is expected in 2016. For a country with a rapidly increasing population, this means almost no real economic growth in per capita terms.

“On top of the slowdown, vulnerabilities have increased. The ability to manage shocks is restricted by low fiscal savings and reserves. And the weakening oil sector could stress balance sheets and put pressure on the banking system.

“Reduced confidence and lower capital spending would also impact the non-oil corporate sector. Unfortunately, this sector looks less resilient today than during the downturn of 2008-09. Companies that have increased their leverage and US-dollar debt in recent years may now come under pressure as they face rising interest rates and a stronger dollar.”

“The new reality of low oil prices and low oil revenues means that the fiscal challenge facing government is no longer about how to divide the proceeds of Nigeria’s oil wealth but what needs to be done so that Nigeria can deliver to its people the public services they deserve – be it in education, health or infrastructure.

“This means that hard decisions will need to be taken on revenue, expenditure, debt, and investment going forward.” she said.
 

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