MARRAKECH, Morocco (Xinhua) – The International Monetary Fund (IMF) has stated that the Nigerian naira is currently under pressure and that Nigeria is free to seek a loan from the IMF if it deems it a suitable option to stabilize its currency. The Washington-based lender, however, commended recent exchange reforms and other measures taken by Nigerian authorities.
The IMF also expressed its support for the decision by the Central Bank of Nigeria (CBN), led by Olayemi Cardoso, to lift the eight-year foreign exchange ban on cement, rice, poultry products, and 40 other items, which had been imposed by the previous CBN administration in 2015. This announcement was made during the World Bank Group/IMF Meeting in Marrakech, Morocco.
The IMF noted that inflation in Nigeria remained high at 26 percent in August, and the naira continued to be under pressure. Despite exchange reforms implemented by President Bola Tinubu, the local currency’s value has continued to decline, reaching 1,045 naira per dollar recently.
The IMF recommended tightening monetary policy by raising the Monetary Policy Rate and managing excess naira liquidity. It also emphasized the need for greater clarity regarding the CBN’s dollar obligations.
Responding to queries about the possibility of Nigeria seeking a currency support loan, the IMF stated that, like any member country, Nigeria could seek IMF financing to address external imbalances, but the Nigerian authorities had not yet approached the IMF with such a request.
Confidence in New CBN Leadership
The IMF expressed confidence in the new leadership of the Central Bank of Nigeria, led by Olayemi Cardoso, and the new Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stating that they had the capacity to make the right decisions to boost the Nigerian economy.
Wale Edun highlighted several fiscal initiatives aimed at increasing tax revenue and reducing waivers to promote economic growth, while Cardoso outlined plans to stabilize the market and navigate Nigeria through its current economic challenges. The new leadership team is currently conducting a comprehensive assessment of the challenges facing the central bank, which may lead to policy adjustments and reforms.
Cardoso’s preliminary assessment identified various challenges facing the CBN, including unorthodox monetary policies, foreign currency management, and the need for creative financing options to address the backlog of foreign exchange demand. The new CBN governor also plans to limit the CBN’s fiscal interventions and address inflation and price stability issues.
The leadership team’s goal is to refocus the CBN to support economic growth and development, in line with President Bola Tinubu’s economic agenda, with the aim of achieving a $1 trillion GDP within eight years. The IMF’s support for these measures reflects the international community’s interest in Nigeria’s economic stability and recovery.