Recession may force Nigeria to seek IMF loan, says FXTM analyst

Lukman Otunuga, a research analyst with ForexTime, a leading forex broker specializing in currency, stocks and commodities trading, says Nigeria may be forced to seek a loan facility from the International Monetary Fund (IMF), if the country enters a recession.

The Central Bank of Nigeria Monetary Policy Committee (CBN MPC) had said at its last meeting that an economic recession was imminent, stating plans to introduce a flexible foreign exchange system, amid other plans to avert recession.

The bank equally stated in April that Nigeria was not seeking an IMF loan, due to the policies of the apex bank, under the leadership of Godwin Emefiele, the CBN governor.

The bank stated that with every IMF loan comes a number of conditions, which may not be appealing to the country, including devaluation of the naira.

In an interview with TheCable, Otunuga, whose analysis is often quoted by leading international media outlets such as: MarketWatch, CNBC, NASDAQ, Reuters, AFP, The Guardian and Yahoo said the country may be forced to seek an IMF loan, depending on the country’s gross domestic product for the second quarter of 2016.

“It’s a very tough situation. What the IMF has asked is quite a lot. The IMF has asked for naira devaluation and addition things that would make it difficult for Nigeria to pay back,” he said.

“I think we have to wait to see GDP in Q2. I think that would be the main determinant if Nigeria runs to the IMF or if Nigeria braces. Once it is confirmed that Nigeria is in a technical recession, on top of reduced credit rating, where are we going to get the funding from? Investors are not going to loan, capital flight as well, with Nigeria in a technical recession, that could be the trigger for the nation to run to IMF.

“It’s a tough one, it’s all about timing, had everything that is being implemented now been done last year when things were still okay, probably we’d be singing a different story now, completely different story.

“Lack of timing, things have taken too long. One could keep optimistic, hope for the best.”