US Shutdown May Affect Nigeria, Other Oil Producers, IMF Warns


The International Monetary Fund (IMF), said on Thursday that the ongoing shutdown witnessed in the U.S. might affect Nigerian and other countries’ trade on oil prices.

Ms. Christine Laggard, Managing Director, said this at a news conference on the official opening of the ongoing annual meeting of the World Bank and the IMF in Washington DC.

“Now, as far as Nigeria is concerned, clearly, we would have to look into how it would affect the price of the oil, because Nigeria is an oil consuming and exporting country,” she said.

“We are, as I said, currently working on this analysis and engaging in a dialogue with countries,’’ she added.

She said that the shutdown would have negative consequences for the U.S. economy and also very negative consequences outside of the U.S. economy.

According to her, the IMF does not take a stand and does not make recommendation as how politically such matters can be resolved.

The IMF chief stated further: “This is not for the IMF to say; we don’t have a political view; we only look at the economic consequences of the measures decided anywhere in the world.

“When it affects largest economy in the world, we are bound to not only look at the immediate domestic consequences, but also have to look at what happens elsewhere.

“And we have to engage in a dialogue with our members to see how they can best prepare for that and anticipate,” the managing director said.

Laggard also said that the effect of the shutdown might materialise in various channels in different economies.

She sated: “In Nigeria, it would include the trade channel because the U.S. economy would have to balance its budget and would certainly reduce its economic activity starting from the third quarter onward.

“The second channel, which is probably going to be much more active, is the financial channel, where as a result of uncertainty and material, practical issues having to do with impaired versus non-impaired securities, we are likely going to see.

“If that matter is not resolved, we are likely to see volatility, uncertainty and consequences on the rest of the world.’’

On the global economic outlook, she said that “2014 looks a little better in forecast with point five and seven per cent up from this year’’.

According to her, the 2013 forecast by IMF indicates that there was recovery, but it was slow and unbalanced.

On support to the low-income economies, she said the IMF had reached the threshold of enough approvals from members to transfer gold profit to meet the financial needs of low income countries.

“We have what we call Poverty Reduction and Growth Trust (PRGT) that we very much want to be sustainable so that it can respond to the needs of the low-income countries. We need a threshold of 90 per cent,” she stated.

“Ninety per cent of the membership has agreed to transfer over to the trust the windfall profit that was made at the time of gold sale that took place about three years ago,” she said.

“So that is the good news of this week for us and we are very pleased that the membership has recognised the need to actually make sure that the PRGT for low income countries be sustainable,’’ she added.