Adjustment of Nigerian Selected Macro Economic Variables to International Monetary Fund Conditionality from 1986 to 2016

Abstract : This research work examined how major macro economic variables in Nigeria such as Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF) and National Savings (NS) reacted to International Monetary Fund (IMF) conditionality from 1986 to 2016. Many policy makers and researchers have questioned the benefits of IMF credit facilities to developing nations. This work therefore seeks to evaluate the impact of IMF conditionality like Reduction in Government Expenditure (TGE), Devaluation of Local Currencies (RER), and Trade openness (TO) on the Identified Macro Economic Variable in Nigeria. The data for the analysis were sourced from the data bank of World Bank. Granger causality test and ordinary Least Square (OLS) method were used to test the formulated hypotheses. The result revealed that IMF conditionality has significant effect on GDP, GFCF and NS of Nigeria. Devaluation of local currency is the greatest IMF conditionality that exerts great negative influence on economic growth of Nigeria. The work recommends among others that: instead of currency devaluation, protectionist policies via guided liberalization should be promoted combined with the use of fiscal policy in order to encourage local production and usage of locally produced goods. TGE that showed significant positive effect on GDP, GFCF and NS is an indication that government can positively influence the economic positions of Nigeria with the use of fiscal policy