… urges CBN to maintain tight monetary stance amid global headwinds
Rising poverty in Africa’s most populous nation is casting a shadow on the radical reforms embarked upon by President Bola Tinubu almost two years ago, according to the International Monetary Fund (IMF).
The Washington-based Fund said in a statement on Friday following its visit to the country led by Axel Schimmelpfennig, IMF mission chief for Nigeria, to hold discussions for the 2025 Article IV Consultations with the authorities.
The IMF stated that while the government has taken important steps to stabilise the economy by abolishing costly fuel subsidies and liberalising its foreign exchange market, “gains have yet to benefit all Nigerians as poverty and food insecurity remain high.”
As at the end of 2023, the World Bank reports that 104 million Nigerians were poor. But the number rose sharply a year after as more than half of the population fell below the poverty line at 129 million.
Read also: IMF endorses Nigeria’s single window trade project amid economic reforms
After Tinubu scrapped the long-standing fuel subsidies, petrol prices more than tripled, stoked inflationary pressures that reached an almost three-decade high, triggered the worst cost-of-living crisis in a generation and sparked days-long protests.
But fuel prices are slowing, albeit not as much as the pre-reforms era. The market is becoming more driven by fundamentals rather than government artificially fixing prices that have kept the country on its knees.
The devaluation of the naira also saw the local currency lose over 70 percent of its value against the US dollars, straining earnings of companies that are exposed to FX.
IMF stated that while the reforms rolled out since 2023 have put the Nigerian economy in a better position to navigate external shocks, “the outlook is marked by significant uncertainty. Elevated global risk sentiment and lower oil prices impact the Nigerian economy.”
“Looking ahead, macroeconomic policies need to further strengthen buffers and resilience, while creating enabling conditions for private sector-led growth,” the IMF said.
Read also: IMF signals global growth downgrade amid surging trade tensions
While the federal government is looking to adjust its N54.99 trillion budget in response to global oil prices slide, the Fund calls for what it referred to as “neutral fiscal stance” as this would support monetary policy to bring down inflation.
It also urged the government to channel savings from the fuel subsidy removal on the budget, especially on critical, growth-enhancing investment, while accelerating and broadening the delivery of cash transfers under the World Bank-supported program to provide relief to those experiencing food insecurity.
Nigeria experienced a renewed inflationary pressure in March as consumer prices climbed to 24.23 percent from 23.18 percent in February 2025. While food inflation slowed 172 basis points to 21.79 percent, its month-on-month reading signals an uptick, rising from 1.67 percent to 2.18 percent.
“A tight monetary policy stance is required to firmly guide inflation down,” the IMF said, explaining that the Monetary Policy Committee’s data-dependent approach has served Nigeria well and will help navigate elevated macroeconomic uncertainty.
