… Endorses sustained tight monetary policy, improved macroeconomic outlook
ABUJA — The International Monetary Fund (IMF) has called on Nigeria to implement a robust foreign exchange (FX) intervention framework to curb excess volatility and maintain the gains of recent economic reforms.
In its 2025 Article IV Consultation report, the IMF acknowledged significant progress made by Nigerian authorities over the past two years, particularly in stabilizing the macroeconomic environment and restoring investor confidence.“The authorities have removed costly fuel subsidies, ceased monetary financing of the fiscal deficit, and enhanced the functioning of the foreign exchange market,” the IMF noted in a statement released in Washington D.C.
These measures, it said, have contributed to improved investor sentiment, enabling Nigeria to re-enter the Eurobond market and attract renewed portfolio inflows. Economic growth rebounded to 3.4% in 2024, primarily driven by a resurgence in hydrocarbon production and a buoyant services sector. However, the agricultural sector remained constrained due to security concerns and productivity issues.
CBN’s Tight Policy Backed
The IMF commended the Central Bank of Nigeria (CBN) for maintaining a tight monetary policy stance and urged the apex bank to continue in that direction until inflation is firmly under control.“The CBN has appropriately maintained a tight monetary policy stance. This should be sustained until disinflation is entrenched,” the report stated.
Inflation declined to 23.7% in April 2025, down from a 31% average in 2024, following naira stabilisation and improvements in domestic food supply. The IMF projects further decline in inflation in the medium term, contingent on continued policy discipline and easing retail fuel prices.
The report also recognised efforts to build international reserves, citing a strong current account surplus and improved portfolio flows. It praised reforms in the FX market for enhancing price discovery and liquidity, which contributed to naira stabilisation.
Banking, Capital Markets, and Risk Management
The IMF acknowledged the ongoing recapitalisation of banks and supported the CBN’s drive to strengthen financial inclusion, deepen capital markets, and improve risk-based supervision — particularly in mortgage and consumer lending.
The Fund also endorsed efforts to enhance anti-money laundering and counter-terrorism financing (AML/CFT) measures, urging Nigeria to resolve remaining issues to exit the Financial Action Task Force (FATF) grey list.
Reforms Praised, Risks Remain
While applauding the discontinuation of deficit monetisation and governance reforms at the CBN, the IMF cautioned that external and domestic risks remain. These include potential declines in global oil prices, rising financing costs, and persistent security threats that could hamper growth and food security.
The Fund further stressed the need for agile policymaking to consolidate reform gains, strengthen resilience, and ensure that the benefits of economic reforms reach more Nigerians.“Policymaking must remain nimble to sustain macroeconomic stability, support inclusive growth, and reduce poverty,” the IMF said.
