*Urges FG To Tighten Monetary Policy To Curb Inflation
THE International Monetary Fund (IMF) has cautioned that despite the reforms introduced since 2023 to put the Nigerian economy in a better position to navigate the external environment, “the outlook is marked by significant uncertainty,” as “elevated global risk sentiment and lower oil prices impact the Nigerian economy.”
The Fund said macroeconomic policies were needed to further strengthen buffers and resilience, while creating enabling conditions for private sector-led growth.
It said though the Nigerian authorities have taken important steps to stabilise the economy, enhance resilience and support growth.
IMF, while acknowledging that the Nigerian authorities have taken important steps to stabilise the economy, enhance resilience and support growth, including stoppage of the financing of the fiscal deficit by the Central Bank of Nigeria (CBN), removal of fuel subsidies and improvement in the functioning of the foreign exchange market, it regretted that gains have yet to benefit all Nigerians, as poverty and food insecurity remain high.
IMF’s Mission Chief for Nigeria, Axel Schimmelpfennig, who led an IMF team to Lagos and Abuja to hold discussions for the 2025 Article IV Consultations with Nigeria from April 2 to 15, in a statement on Friday, April 18, urged the Federal Government to tighten its monetary policy, saying such as necessary to firmly guide inflation down in Nigeria.
Schimmelpfennig said the Nigerian authorities communicated to the Mission its desire to implement this year’s budget in a manner that was responsive to the decline in international oil prices, noting that a neutral fiscal stance would support monetary policy to bring down inflation.
He stated: “To safeguard key spending priorities, it is imperative that fiscal savings from the fuel subsidy removal are channelled to the budget.
“In particular, adjustments should protect critical, growth-enhancing investment, while accelerating and broadening the delivery of cash transfers under the World Bank-supported programme to provide relief to those experiencing food insecurity.
“A tight monetary policy stance is required to firmly guide inflation down.”
Schimmelpfennig said the Monetary Policy Committee’s data-dependent approach had served Nigeria well and would help navigate elevated macroeconomic uncertainty, adding: “Announcing a disinflation path to serve as an intermediate target can help anchor inflation expectations.”
