Nigeria monetary policy must target inflation: IMF

Wed Nov 24, 2010 6:19pm GMT

WASHINGTON (Reuters) - Monetary policy in Nigeria should be geared toward lowering "stubbornly high" inflation to single digits, a senior International Monetary Fund official said on Wednesday.

IMF mission chief to Nigeria, Scott Rogers, said in a statement after annual talks with the government that the IMF supported the authorities' plans to cut the fiscal deficit for 2011-13, because it would help shore up falling international reserves and lower inflation.

"This would enable the government to rebuild safety buffers, support an expansion of credit to the private sector, and lower inflation," Rogers said.

He said 2010 economic growth in sub-Saharan Africa's second-biggest economy would be "exceptionally high" in 2010 due to a recovery in oil output.

Rogers said the IMF mission supported the central bank's September decision to raise rates to 6.25 percent, the first increase in more than a year.

He said fiscal policy for all levels of government should be anchored by a strong oil-price rule to align spending with available resources.

"Embedding a well-defined oil price rule in legislation could help maintain fiscal discipline," he added.

Nigeria's 2011 budget will be discussed by parliament in two weeks time, Finance Minister Olusegun Aganga said on Wednesday. See story at .

Legislation to create a sovereign wealth fund in which oil profits will be saved will be sent to the National Assembly next week, Aganga added.   Continued...

<p>Nigeria's central bank governor Lamido Sule Lamido speaks at conference on banking reforms in Nigeria in Lagos, February 11, 2010. REUTERS/Akintunde Akinleye</p>
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