The Imf in the Nigerian Economy: Pressures and Responses

It has become a common practice for developing countries with serious economic problems, including huge international indebtedness and other internal economic dislocations, to blame international financial institutions, notably the International Monetary Fund (IMF) and the World Bank for their problems. Yet these countries seek financial assistance from the same institutions they condemn. Specifically, the Fund is condemned in a rhetorical fashion for stipulating harsh conditions that must be met by the debtor country before new loans can be granted. The Fund is also often condemned for encouraging other commercial banks to refuse to grant loans to countries that fail to implement the Fund's stabilization programmes. Despite this posture, the leaders in these countries do recognise the importance of foreign aid to their countries' economy in the form of grants, loans or investments, but sometimes refuse to accept that none of these forms of foreign aid is without its positive and negative implications in their domestic economy. For a variety of reasons including pleasing their internal audiences, the leaders play down the negative implications of foreign aid and extol its positive side. When it suits the occassion, they deny that the aid has any positive value or as it often happens, craftily allow the positive and the negative aspects to neutralise each other in order to keep political discourse alive and interesting. The relationship between the IMF and Nigeria very much typifies what has been described above. To the averagely articulate Nigerian, the Fund is responsible for aggravating an already bad economic situation (at least sufficient sentiments have been aroused to achieve that purpose). On the other hand, government officials, businessmen and the “experts†who know about the intricacies of the international economy, privately and publicly believe strongly that in the final analysis, the Nigerian military leaders still have to seek an accommodation with the Fund and perhaps other foriegn financial institutions if the country is to get out of its present economic predicament. In essence, there is a sort of waiting game between the Fund and Nigeria, with each side waiting for the other to make the appropriate move. The IMF believes that all things considered, Nigeria qualifies for the Fund's assistance if only there is a little more focus in the right direction to satisfy the Fund's performance criteria. The Nigerian Government on its part believes that the country has, through its present “stringent economic management,†satisfied the Fund's requirements and consequently has qualified for a more generous assistance from the Fund. This article examines the relationship between the IMF and Nigeria from the civilian administration of President Shehu Shagari to the present military government of General Ibrahim Babangida. It discusses the inevitable pervasive influence the Fund exercises in the Nigerian economy and the expected responses of the government to pressures from the Fund. But first, let us consider what the IMF stands for, how it carries out its functions and its relations generally with the developing countries.