VZCZCXRO4373
PP RUEHMA RUEHPA
DE RUEHOS #0256/01 1601542
ZNR UUUUU ZZH
P 091542Z JUN 09
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC PRIORITY 0815
INFO RUEHUJA/AMEMBASSY ABUJA 0414
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHOR/AMEMBASSY GABORONE 0118
RUEHGB/AMEMBASSY BAGHDAD 0062

UNCLAS SECTION 01 OF 02 LAGOS 000256 
 
SIPDIS 
 
STATE PASS USTR FOR LISER, AGAMA 
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS 
STATE PASS TDA FOR, DSHUSTER, MARIN 
STATE PASS EXIM FOR JRICHTER 
STATE PASS USAID FOR NFREEMAN, GBERTOLIN 
GABORONE PASS PDROUIN 
BAGHDAD PASS DMCCULLOUGH 
COMMERCE FOR KBURRESS, DHARRIS 
TREASURY FOR DPETERS, RHALL, RABDULRAZAK 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EAGR EAID EINV ETRD NI
SUBJECT: NIGERIA: IMF PROJECTS 2.9 PERCENT GROWTH RATE 
 
¶1. (U) Summary.  Officials of the International Monetary Fund (IMF) 
on May 19 made a presentation on the economic outlook for 
sub-Saharan Africa in Lagos, and predicted 2.9 percent real GDP 
growth for Nigeria in 2009, with 4 percent non-oil sector growth. 
The IMF commended the Central Bank of Nigeria (CBN) on the policies 
the bank introduced to stem the impact of the global financial 
crisis (GFC) on Nigeria, but expects Nigeria's foreign reserves to 
fall below USD 40 billion by yearend 2009.  Although the CBN claimed 
reserves were USD 47.8 billion at end of March 2009, it admits 
significant reserve accumulation this year is unlikely and that 
Nigeria may in fact record a trade current account deficit for the 
year.    End Summary. 
 
IMF Regional Economic Outlook for Sub-Saharan Africa 
--------------------------------------------- ------- 
 
¶2. (U) On May 19, the International Monetary Fund (IMF) in 
conjunction with the Central Bank of Nigeria (CBN) presented the 
Regional Economic Outlook for sub-Saharan Africa (SSA) to a cross 
section of business executives in Lagos. IMF Deputy Director Mark 
Plant reviewed the impact of the global financial crisis (GFC) on 
SSA, highlighting fallen commodity prices and foreign investment 
outflows, and low demand for SSA products as the major shock points. 
Norbert Funke, another IMF official, mentioned low inflows from 
overseas and spillover effects like foreign banks' withdrawal of 
credit lines, tighter credit conditions and less favorable trade 
finance conditions, as chief stress points for SSA financial 
systems.  (Note: The presentations are available at 
www.imf.org/external/country/nga/rr/index.htm End Note.) 
 
¶3. (U) Plant projected SSA growth to decline from 5.4 percent in 
2008 to 1.5 percent in 2009 and recover mildly to 3.8 percent in 
2010, while fiscal deficits are expected to widen in most countries. 
 He urged African policy makers to adopt expansionary fiscal and 
monetary policies where possible and to allow exchange rates to 
adjust to external environments to mitigate the impact.  Foremost, 
Plant urged African governments against policies that could 
undermine economic reforms implemented in recent years.  Funke 
advised SSA central banks to close regulatory and legal gaps and 
strengthen supervision of the financial sector. 
 
2.9 Percent Growth; Less than USD 40 billion 
Foreign Reserve Projected for Nigeria in 2009 
--------------------------------------------- 
 
¶4. (U) Plant projected a 2.9 percent real gross domestic product 
(GDP) growth for Nigeria in 2009, mostly driven by the non-oil 
sector which is expected to grow by 4 percent. This is down from 5.3 
percent growth in 2008 as estimated by the IMF. Inflation is 
expected to pick up as significant swings in fiscal and current 
account balances are likely, he said. Plant noted that Nigeria's 
strong external reserves, which were about USD 57 billion in 
November 2008, cushioned the initial impacts of the GFC, but he 
expected reserves to dip to less than USD 40 billion by end of 2009. 
Plant commended the CBN for its policy responses to mitigate the 
second round effects of the crisis on Nigeria's financial sector, 
particularly by allowing the naira to depreciate in late 2008, 
although he urged the CBN to strive to unify the exchange rate 
markets in the near term. 
 
¶5. (U) Charles Mordi, CBN's Director of Research, said Nigeria's 
external reserve at end of March 2009 was USD 47.8 billion.  He 
conceded that significant reserve accumulation is unlikely in 2009 
because of low oil prices and the Niger Delta crisis which has 
steadily reduced Nigeria's crude oil production.  Mordi said credit 
to the private sector grew between 2004 and 2007, declined in 2008 
and was negative in first quarter 2009. He put the total of Nigerian 
banks' exposure to the capital market at naira 784 billion (USD 5.4 
billion), down from naira 1 trillion (USD 6.9 billion) initially 
touted by the CBN. However, the CBN anticipates a modest recovery of 
the stock market as confidence and capital inflows return slowly. 
The Bank projects Nigeria will still grow by 5 percent although 
Nigeria may record a current account deficit for the year, Mordi 
said. 
 
 
LAGOS 00000256  002 OF 002 
 
 
¶6. (U) This cable has been cleared by Embassy Abuja. 
 
Blair