Buhari Government and the IMF Pressure. – By Vincent Obia.

President Buhari should not let pressure from the International Monetary Fund change his focus on home-grown solutions to the country’s economic problems, writes Vincent Obia
Managing Director of the International Monetary Fund, Ms. Christine Lagarde, ended a four-day visit to Nigeria on Thursday, which has been widely associated with the fund’s typically hurting economic prescriptions. IMF said in a release ahead of Lagarde’s visit that she was coming to engage the country’s political and business leaders on ways to promote development in the face of awful revenue shortfalls engendered by a sharp fall in crude oil prices. It said the trip was also to strengthen IMF’s partnership with Africa’s largest economy.

Despite the explanations, it seemed palpably clear what Lagarde really meant to achieve. Since October last year, the IMF has been urging Nigeria to devalue the Naira and remove import restrictions as part of strategies to absorb the latest economic shocks, strengthen the economy, and promote development programmes in line with the realities of the current global economy.

Though, the meetings between the IMF chief and President Muhammadu Buhari were mainly held behind closed doors, many believe the visit by Lagarde was an extension of the efforts to push IMF’s economic prescriptions. This feeling caused a noticeable sense of outrage, which was not lost on Lagarde herself. “Let me be very clear,” she said on Tuesday in Abuja after a meeting with Buhari. “I’m not here nor is my team here to negotiate a loan with conditionalities, we’re not programming negotiations.

“Frankly, given the determination and resilience displayed by the president and his team, I don’t see why an IMF programme is going to be needed.”

Nigerians have every cause to be wary of IMF’s economic prescriptions.

Created in 1944 and originally designed to promote international economic cooperation and provide its member-countries with short term trade loans, the IMF has since the global debt crisis of the 1980s assumed the role of bailing out countries during financial crises. But its loans are usually tied to certain conditions, called structural adjustment policies, which give IMF enormous latitude to influence economic and political decisions in the receiving countries. The fund then virtually decides the extent of spending on key areas, such as education and health care, in those countries.

The IMF conditionalities, which have been widely criticised as an immoral system of modern day colonialism, typically includes cutting spending on education and health care, removing subsidies, devaluing the currency to make exports cheaper, privatising national assets, and freezing wages.

However, the austerity measures have been associated with increasing poverty, inability to develop a strong domestic economy, and exploitative tendencies by multinational corporations.

The IMF ties poor countries to the international economic system as perpetual junior partners. The fund tends to make the elite in the Third World less accountable to their own people, but more accountable to the elite in the First World through the economic prescriptions. And in the receiving countries, IMF’s economic recommendations prioritise production for export, to the detriment of local consumption.

The IMF-prescribed policies have a notorious track record of doing more harm than good to the affected countries. In such cases the IMF often likes to claim that faulty implementation of its remedies – not the measures themselves – is to blame.

The civilian government of former President Shehu Shagari (1979-83) and the military regime of former military president Ibrahim Babangida (1985=1993) implemented various versions of IMF’s structural adjustment programmes. But as it turned out, the country would have been better off without those policies.
The Trade Union Congress, in a statement on Tuesday, warned the Buhari government to be careful in its dealings with the IMF because of the precarious conditions, like mass suffering and impoverishment, that are usually associated with the fund’s aid programmes. TUC said in the release signed by its president, Mr. Bala Kaigama, and secretary general, Mr. Musa Lawal, “This warning is informed by our bitter past experience with the financial body. Our country is already in dire straits and cannot cope with the IMF’s characteristic shylock conditionalities attached to its credit facilities, and must not accept same if that is what the visit is about.

“For the umpteenth time, we wonder aloud: Can’t we solve our challenges as a nation without foreign intervention?”

Buhari has, quite commendably, addressed that concern. The president said while receiving the IMF managing director in Abuja that his administration would look inwards, enforce more fiscal discipline, and adopt global best practices to alleviate the adverse effect of the current drop in crude oil prices. Buhari should remain on this line and avoid any temptation to veer into foreign-oriented strategies, particularly from the Bretton Woods institutions, which have not helped the country in the past.