The International Monetary Fund (IMF) said, several foreign exchange reforms in Nigeria had brought stability in the nation’s currency and eventually a decline in inflation.
This is as it warned that, continued insecurity may reverse the progress made if not tackled. IMF stated this in 2025 Article IV Consultation with Nigeria released on Wednesday.
The Fund noted that, forex stabilisation and improvements in food production brought inflation to 23.7 percent year on-year in April 2025 from 31 per cent annual average in 2024 in the backcasted rebased CPI index released by the Nigerian Bureau of Statistics (NBS).
Stating that reforms to the forex market and foreign exchange interventions have brought stability to the naira, the IMF staff report noted that inflation is expected to decline further in the medium-term with continued tight macroeconomic policies and a projected easing of retail fuel prices.
Pointing out that fiscal performance improved in 2024, it said, “Revenues benefited from naira depreciation, enhanced revenue administration and higher grants, which more-than-offset rising interest and overheads spending.
“Growth accelerated to 3.4 percent in 2024, driven mainly by increased hydrocarbon output and vibrant services sector. Agriculture remained subdued, owing to security challenges and sliding productivity. Real GDP is expected to expand by 3.4 per cent in 2025, supported by the new domestic refinery, higher oil production and robust services.”
Against a complex and uncertain external environment, medium-term growth is projected to hover around 3½ per cent, supported by domestic reform gains.
To lift Nigeria’s growth outlook, improve food security, and reduce fragility, the IMF Directors highlighted the importance of tackling security, red tape, agricultural productivity, infrastructure gaps, including boosting electricity supply, as well as improved health and education spending, and making the economy more resilient to climate events.
They noted that, addressing structural impediments to private credit extension is also needed to support growth, even as they recognised actions to strengthen the banking system, including the ongoing process of increasing banks’ minimum capital. The Central Bank of Nigeria(CBN) had directed that banks to shore up their capital base, giving them a two year period which elapses at the end of first quarter in 2026.
The IMF Staff report also welcomed the authorities’ efforts to boost financial inclusion and promote capital market development, while emphasising the importance of moving to a robust risk-based supervision for mortgage and consumer lending schemes as well as the fintech and crypto sectors.
Directors welcomed progress made in strengthening the AML/CFT framework and stressed the importance of resolving remaining weaknesses to exit the FATF grey list.
The IMF directors at the end of the consultation, called for a neutral fiscal stance to safeguard macroeconomic stabilization with priority given to investments that enhance growth.
Directors also called for accelerating the delivery of cash transfers to assist the poor. They commended the authorities on advancing the tax reform bill, an important step towards enhancing revenue mobilization and creating fiscal space for development spending, while preserving debt sustainability.
It agreed that, the Central Bank of Nigeria(CBN) is appropriately maintaining a tight monetary policy stance, which should continue until disinflation becomes entrenched, welcoming the discontinuation of deficit monetization and ongoing efforts to strengthen central bank governance to set the institutional foundation for inflation targeting.
Directors also welcomed steps taken by the authorities to build reserves and support market confidence and praised reforms to the foreign exchange market that supported price discovery and liquidity.
They called for implementation of a robust foreign exchange intervention framework focused on containing excess volatility, stressing that the exchange rate is an important shock absorber.
Directors also agreed with staff’s call to phase out existing capital flow management measures in a properly timed and sequenced manner.
