The International Monetary Fund (IMF) has indicated its intention to conduct a due diligence exercise on the Central Bank of Nigeria as part of a fresh ‘safeguards assessment’, following its latest $3.4bn support to the government in the country’s fight against the COVID-19 pandemic.
The Breton Woods institution in a FACTSHEET hoisted on its website, stated that safeguards assessment of central banks would help in protecting IMF’s resources, and to “ensure that loans to member countries are repaid as they fall due so those resources become available to other members in need.
“When the IMF provides a loan to a country, a due diligence exercise is carried out to obtain assurance that the country’s central bank receiving IMF resources is able to manage the funds and provide reliable information,” the fund further explained in the FACTSHEET”, the Fund stated.
Described as a diagnostic review of a central bank’s governance and control framework, the assessment involves five key areas, namely external and internal audit mechanisms, legal structure and autonomy, financial reporting and system of internal controls.
The Federal Government had earlier indicated the country’s apex bank’s readiness to undergo a fresh safeguard assessment in a Letter of Intent it sent to the IMF as part of the application for the $3.4bn emergency financial assistance.
The letter dated April 21, 2020 jointly signed by the Finance Minister, Zainab Ahmed, and the CBN Governor, Godwin Emefiele, addressed to IMF Managing Director, Kristalina Georgieva, was published in a staff report on Nigeria’s request for the Rapid Financing Instrument, and approved by the IMF on Tuesday.
The Letter of Intent reads in part: “In line with IMF safeguards policy, we commit to undergoing a new safeguards assessment conducted by the fund.
“To this end, we have authorised IMF staff to hold discussions with external auditors and provide IMF staff access to the CBN’s most recently completed external audit reports.
“We do not intend to introduce measures or policies that would exacerbate the current balance-of-payments difficulties.
“We do not intend to impose new or intensify existing restrictions on the making of payments and transfers for current international transactions, trade restrictions for balance-of payments purposes, or multiple currency practices, or to enter into bilateral payments agreements which are inconsistent with Article VIII of the IMF’s Articles of Agreement.”
The IMF Article VIII provides in Sections 2 and 3 that members shall not impose or engage in certain measures, namely restrictions on the making of payments and transfers for current international transactions, discriminatory currency arrangements, or multiple currency practices, without the approval of the fund.
The multilateral development finance institution also confirmed that Nigerian authorities had committed to “undergoing a safeguards assessment as soon as feasible.
It stated: “They (Nigerian authorities) will provide fund staff with the necessary central bank audit reports and have authorised the external auditors of the Central Bank of Nigeria to hold discussions with staff,” the IMF noted in the staff report.
The government promised to scale up the anti-corruption campaign, and assured of transparent management of the $3.4bn and other funds received to address the impact of the COVID-19 pandemic.
The letter specifically stated that the government would commission an independent audit into its emergency response expenditures, its transparent management through anti-corruption agencies’ monitoring and also strengthen the role of the Federal Audit Board in combating corruption.
The federal government letter stated, inter alia: “We (Federal Government) fully recognise the importance of ensuring that financial assistance received is used for intended purposes.
“To that end, we will create specific budget lines to facilitate the tracking and reporting of emergency response expenditures and report funds released and expenditures incurred monthly on the transparency portal (http://opentreasury.gov.ng/).”
Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.
