IMF Applauds Nigeria’s Economic Overhaul, Forecasts 3.3% Growth and 24% Inflation for 2024, Urges Caution on CBN Act AmendmentMay 10, 2024

By Milcah Tanimu

On May 10th, the International Monetary Fund (IMF) conveyed its confidence in Nigeria’s proactive economic reforms. Emphasizing the importance of the Central Bank of Nigeria’s autonomy, the IMF advised against proposed changes to the bank’s governing legislation.

These insights were shared in the Article IV Staff Consultation Report from the IMF’s Board of Governors, released in Washington on Thursday.

The report highlighted Nigeria’s recent shift toward comprehensive reform initiatives aimed at reinstating macroeconomic stability and fostering inclusive economic advancement under its new administration.

It acknowledged the government’s strides in abolishing fuel price subsidies, unifying official foreign exchange platforms, and prioritizing revenue generation, governance enhancement, and fortifying monetary and exchange rate frameworks, alongside bolstering social safety nets.

While acknowledging Nigeria’s swift emergence from the Covid-19-induced recession, the IMF observed a stagnation in per-capita income, attributed to a decade of inadequate reforms, security threats, sluggish growth, and persistently high inflation, exacerbating poverty and food insecurity.

Despite a slowdown in real GDP growth to 2.9% in 2023, primarily due to agricultural and trade weaknesses, the IMF projected a 3.3% expansion for 2024, anticipating improvements in both oil and agricultural sectors amid enhanced security measures.

The IMF stressed the imperative of resolute and well-sequenced policy implementation to expedite inclusive and resilient growth, acknowledging the financial sector’s resilience amidst heightened risks.

While inflation surged to 33.2% year-on-year in March, the IMF forecasted a gradual decline to 24% by the end of 2024 with continued monetary tightening.

The IMF commended the government’s fiscal strengthening in 2023, buoyed by currency depreciation and enhanced revenue administration, allowing for restrained spending and a one-off wage adjustment to mitigate inflationary impacts on public servants.

Despite a decline in gross international reserves in 2023 due to persistent capital outflows, the IMF noted a stabilizing trend in the naira post-unification of foreign exchange markets in June 2023, bolstered by monetary policy tightening and renewed FX interventions.

While recognizing the administration’s bold reforms and emphasis on revenue mobilization, governance, and social safety nets amidst formidable economic and social challenges, the IMF directors emphasized the necessity of steadfast, well-coordinated, and transparent reforms to restore macroeconomic stability, alleviate poverty, and foster inclusive growth.

The IMF directors cautioned against amendments to the CBN Act that could undermine the central bank’s autonomy, recommending continued progress in implementing recommendations from the 2021 safeguards assessment. They lauded efforts to discontinue deficit monetization and commended strides in macroeconomic policy coordination.


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