The IMF recommends a close monetary policy to lower the inflation of Nigeria

The International Monetary Fund (IMF) states that a close monetary policy position is needed to firmly guide the inflation in Nigeria.

Axel Schimmelpfennig, head of the Mission of the IMF for Nigeria, said this in a statement on Friday after his visit to keep discussions for the consultations of article IV of 2025 with Nigeria.

Schimmelpfennig led a FMI team to Lagos and Abuja from 2 to 15 April and released the following statement:

“The Nigerian authorities have taken important measures to stabilize the economy, improve resilience and support growth.

“The financing of the tax deficit by the Central Bank has ceased and expensive for the fuel have been removed and the operation of the change market has improved.

“Earnings have yet to benefit from all Nigerians since poverty and food insecurity remain high.

“The perspectives are marked by a significant uncertainty. High global feeling and lowest oil prices affect the Nigerian economy.”

He said the reforms since 2023 had put the Nigerian economy in a better position to navigate in the external environment.

Schimmelpfennig said to look forward, the macroeconomic policies necessary to further strengthen buffers and resilience while creating the qualifying conditions for guided growth by the private sector.

He said that the Nigerian authorities communicated to the mission that they would implement the 2025 budget in order to respond to the decline in international oil prices.

Schimmelpfennig has said that a neutral tax position will support monetary policy to reduce inflation.

“To safeguard the key spending priorities, it is essential that tax savings from removing the fuel subsidy are channeled to the budget.

“In particular, adjustments should protect critical investments, which improve growth, accelerating and expanding the delivery of cash transfers within the world program supported by banks to provide relief to those who experience food insecurity.

“A close monetary policy position is needed to firmly reduce inflation.”

He said that the approach dependent on the data of the Committee for Monetary Policies served Nigeria well and would have contributed to navigating in the high macroeconomic uncertainty.

“The announcement of a disinflation path to act as an intermediate target can help anchor inflation expectations.”