The International Monetary Fund (IMF) says a tight monetary policy stance is required to firmly guide inflation down in Nigeria.
Axel Schimmelpfennig, IMF’s mission chief for Nigeria, said this in a statement on Friday following his visit to hold discussions for the 2025 Article IV Consultations with Nigeria.
Schimmelpfennig led an IMF team to Lagos and Abuja from April 2 to 15 and issued the following statement:
“The Nigerian authorities have taken important steps to stabilise the economy, enhance resilience, and support growth.
“The financing of the fiscal deficit by the central bank has ceased, costly fuel subsidies were removed, and the functioning of the foreign exchange market has improved.
“Gains have yet to benefit all Nigerians as poverty and food insecurity remain high.
“The outlook is marked by significant uncertainty. Elevated global risk sentiment and lower oil prices impact the Nigerian economy.”
He said the reforms since 2023 had put the Nigerian economy in a better position to navigate the external environment.
Schimmelpfennig said looking ahead, macroeconomic policies needed to further strengthen buffers and resilience while creating enabling conditions for private sector-led growth.
He said the Nigerian authorities communicated to the mission that they would implement the 2025 budget in a manner that was responsive to the decline in international oil prices.
Schimmelpfennig said a neutral fiscal stance would support monetary policy to bring down inflation.
“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.”
He said the Monetary Policy Committee’s data-dependent approach had served Nigeria well and would help navigate elevated macroeconomic uncertainty.
“Announcing a disinflation path to serve as an intermediate target can help anchor inflation expectations.”
