Nigeria's economy, the biggest in Africa, is likely to
contract by 1.8 percent this year, the International Monetary Fund (IMF) said
on Tuesday, as the country grapples with the impact of low oil prices. The
sharp fall in global prices since 2014 has led to a prolonged economic crisis
since the crude sales make up around 70 percent of government revenue.
The IMF's projection for this year, contained in its World
Economic Outlook update, is down from the 2.3 percent growth it foresaw in its
April forecast. It now forecasts 1.1 percent growth for 2017, down from 3.5
percent in the April forecast.
Gross domestic product contracted by 0.36 percent in the
first quarter of the year and the central bank's governor has said a recession
appears to be imminent.
"In Nigeria, economic activity is now projected to
contract in 2016, as the economy adjusts to foreign currency shortages as a
result of lower oil receipts, low power generation, and weak investor
confidence," the IMF said.
Central bank currency restrictions imposed last year in an
attempt to protect dwindling foreign reserves prompted investors to flee and
led to dollar shortages, pushing down the naira currency's value on the
country's burgeoning black market.
The peg on the value of the naira, which had been in place
for 16 months, was removed in June but liquidity remains thin.
Militant attacks on oil and gas facilities in the southern
Niger Delta energy hub have cut oil production, pushing what was Africa's
largest oil producer behind Angola and threatening the country's main revenue
source.
Last week the budget minister told lawmakers that the country's
first quarter revenues reached only 55 percent of what the government had
targeted. He said the attacks on oil facilities were largely to blame, Reuters
reports.
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