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The International Monetary Fund announced today that the federal government’s Economic Recovery and Growth Plan may not achieve its objectives unless the government implements stronger macroeconomic policies.

In a press statement released after the conclusion of its Article IV consultation with Nigeria, the IMF said that although it welcomes the plan as a step forward, the lack of a more transparent foreign exchange regime and low non-oil tax collections may negate its objectives.

“Directors welcomed the authorities’ Economic Recovery and Growth Plan (ERGP), which focuses on economic diversification driven by the private sector, and government initiatives to strengthen infrastructure – including the recently adopted power sector recovery plan. However, they underlined that without stronger policies these objectives may not be achieved,” the IMF said.

On Wednesday, President Muhammadu Buhari officially launched the ERGP shortly before the commencement of the Federal Executive Council meeting in Abuja. The plan, which was published on March 7th, aims to transform Nigeria’s economy into a diversified and more inclusive economy by focusing on promoting industrialization, food security through agro-related manufacturing, and achieving sufficiency in energy.

The Washington D.C.-based lender said its outlook on Nigeria is challenging given the country’s continuing economic problems. The Fund said it expects growth to pick up to 0.8 percent this year due mainly to some recovery in oil production and a continuing strong performance in agriculture.

“Directors commended the efforts already made by the authorities to reduce vulnerabilities and enhance resilience, including by increasing fuel prices, raising the monetary policy rate, and allowing the exchange rate to depreciate,” the IMF said. “However, in light of the persisting internal and external challenges, they emphasized that stronger macroeconomic policies are urgently needed to rebuild confidence and foster an economic recovery.”

On the banking sector, the Fund said existing prudential requirements and targeted audits of weaker banks could help contain risks. But with declining asset quality, it will be important to further intensify bank monitoring, enhance contingency planning, and strengthen resolution frameworks.