Nigeria Susceptible to Capital Flows Reversal, Warns IMF

The International Monetary Fund (IMF) warned that Nigeria is susceptible to any delayed capital flows reversal despite the strong Foreign Portfolio Investment (FPI) recorded by the country in recent times.
 
Antoinette Sayeh,The Director, African Department, IMF stated this during the launch of the multilateral institution’s Africa Regional Economic Outlook titled: “Keeping the Pace,” that without significant policy measures, a prolonged negative oil price shock or a permanent real Gross Domestic Product (GDP) growth shock could undermine the progress that had been made in achieving macroeconomic stability in Nigeria.
She advised that given Nigeria’s position, it was important for the country to take timely policy actions to be able to avert future sustainability problems that could come up from such shocks. “The main sources of risk are commodity price risk and the reversal of capital flows which has increased significantly in the region over the years. Portfolio inflows have gained traction in some countries and mostly in frontier countries like Nigeria,” she added.
 
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