Mustapha Chike Obi, CEO of AMCON and other financial experts have picked holes in the logic of the IMF asking the Federal Government to begin winding down AMCON.
Part of the multilateral institution’s 2012 Article IV consultation on Nigeria released at the weekend, recommended winding down the operations of the corporation over what it described as the need to curb moral hazard and fiscal risks.
However Chike-Obi said, “They commended Nigeria for fixing the banking sector and said it should wind down AMCON. But I find it very surprising that an institution as serious as IMF will make such recommendation like that without telling us how to do it and in what time frame and what assistance they can offer for us to wind down.
“We are aware that IMF has its hands full on banking crisis all over the Euro zone that they have been struggling to resolve. Therefore, it is strange to hear such a comment in a country where the crisis has been resolved. It is part of our plan to slow down AMCON’s activities, but the comment they made is baffling.”
Also the Managing Director of the Financial Derivatives Company, Bismarck Rewane said, “AMCON is just two years and they are suggesting we wind down. Are they saying if there is another crisis, we should set up another AMCON? If AMCON is there, anytime there is a systemic risk, it can take it off.
“I am not aware of any part of the world where a distress resolution vehicle is set up and after two years, you shut it down. You can ask AMCON to slow down it activities, which to me is what it is doing now. So I totally disagree with IMF,” Rewane added.
AMCON recently said it is considering issuing dollar-denominated bonds to fill a N5 trillion refinancing gap.
Besides the recommendation for the winding up of AMCON, IMF noted in the report that Nigeria’s macroeconomic performance has been broadly positive over the past year.
It added: “The fiscal policy stance was tightened in 2012 and fiscal buffers are being rebuilt. The non-oil primary deficit of the consolidated government is estimated to have narrowed from about 36 per cent of non-oil GDP in 2011 to 30.5 per cent in 2012, mainly due to expenditure restraint. Monetary policy remained tight in 2012 in response to inflationary pressures.
“In 2013, growth is expected to recover to above 7 per cent. Inflation is projected to decline below 10 per cent, supported by the tight monetary policy stance and ongoing fiscal consolidation. The key downside risks are a large drop in world oil prices; and slow progress in building consensus around key fiscal reforms.
“Directors welcomed the central bank’s commitment to address supervisory and regulatory gaps identified in the Financial Stability Assessment Update, particularly the need to strengthen cross-border supervision and the regime against money laundering and terrorism financing.”