The International Monetary Fund (IMF) has charged Nigeria to implement a robust foreign exchange (FX) intervention framework, focusing on containing excess volatility. It insisted that the exchange rate is an important shock absorber.
This formed as part of the report on the 2025 Article IV Consultation with Nigeria. It hailed the country’s monetary and fiscal authorities for successfully implementing significant reforms in the past two years.
The team said: “The Nigerian authorities have implemented major reforms over the past two years, improving macroeconomic stability and enhancing resilience. The authorities have removed costly fuel subsidies, stopped monetary financing of the fiscal deficit and improved the functioning of the foreign exchange market.
“Investor confidence has strengthened, helping Nigeria successfully tap the Eurobond market and leading to a resumption of portfolio inflows. Growth accelerated to 3.4 per cent in 2024, driven mainly by increased hydrocarbon output and the vibrant services sector. Agriculture remained subdued, owing to security challenges and sliding productivity.”
The IMF team also welcomed the gains in macroeconomic stability and resilience. The statement issued in Washington DC, yesterday, noted that the Central Bank of Nigeria (CBN) has appropriately maintained a tight monetary policy stance, which should continue until disinflation is entrenched.
The IMF recognised measures to strengthen the banking system, including the ongoing recapitalisation process. The Bretton Woods institution welcomed the CBN’s efforts aimed at enhancing financial inclusion and promoting capital market growth while emphasising the need to adopt robust risk-based supervision for mortgage and consumer lending schemes.
The IMF team also commended the efforts to strengthen the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework while stressing the importance of resolving pending issues to exit the FATF grey list.
It applauded the discontinuation of deficit monetisation and ongoing efforts to strengthen central bank governance, setting the institutional foundation for inflation targeting.
According to the statement, the directors also lauded the steps taken by the authorities to build reserves and bolster market confidence. They praised the bank’s reforms in the FX market that supported price discovery and liquidity.
The IMF further observed that gross and net international reserves rose in 2024, supported by a strong current account surplus and better portfolio inflows, adding that Reforms to the FX market and foreign exchange interventions had stabilised the naira.
It noted that naira stabilisation and improvements in food production reduced inflation to 23.7 per cent year-on-year in April 2025, down from a 31 per cent annual average in 2024, according to the back-casted rebased CPI index.
It was noted that inflation should decline further in the medium term with continued tight macroeconomic policies and a projected easing of retail fuel prices.
The report also noted that downside risks have increased with heightened global uncertainty. A further decline in oil prices or an increase in financing costs would adversely affect growth, and fiscal and external positions, it stated.
Deterioration of security could impact growth and food insecurity, it stated.
While observing that the gains of reforms had yet to benefit all Nigerians, the IMF emphasised the importance of agile policymaking to safeguard and enhance macroeconomic stability, create enabling conditions to boost growth and reduce poverty.
