AMCON faults IMF, says it needs time to recover bad loans
The Asset Management Corporation of Nigeria has faulted the recommendation of the International Monetary Fund (IMF) which says that the corporation should be liquidated; instead AMCON says it will require appreciable time to clean up the nation's financial system of toxic loans.
According to a statement by its Managing Director, Mr. Mustafa Chike-Obi, the time frame will be used to pursue the recovery of the N5tn bad loans from debtors and ensure the refinance of the corporation's N1.7tn ($11bn) bonds, which were created by its acquisition of non-performing loans of banks.
He said; '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.'
'They (IMF Executive Board members) 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 timeframe and what assistance they can offer for us to wind down.
'We are aware that IMF has its hands full on banking crises 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.'
Chike-Obi said that rather than an immediate liquidation of AMCON, the IMF actually wanted the process to end in seven years' time, whereas the management was looking at 10 years from now.
He said the process for the winding down had already commenced in view of the success already recorded in its efforts to recover bad loans, which before now made up about half of all loans, but had since fallen to within the Central Bank of Nigeria's target of five per cent.
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.
In the report, IMF Executive Board noted that Nigeria's macroeconomic performance had been broadly positive over the past year.
It stated in the report, '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 seven 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.'