The International Monetary Fund (IMF) on Friday called for a tight monetary policy to firmly lower Nigeria’s inflation.
IMF’s mission chief for Nigeria, Axel Schimmelpfennig, made the call in a statement 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.
He said: “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.
“Looking ahead, macroeconomic policies are needed to further strengthen buffers and resilience while creating enabling conditions for private sector-led growth,” the IMF official added.
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 relieve those experiencing food insecurity.
“A tight monetary policy stance is required to guide inflation down firmly,” he concluded.
Source: Ripples Nigeria