The International Monetary Fund (IMF) has cautioned the Federal Government against proposed amendments to the Central Bank of Nigeria (CBN) Act, advocating instead for the reinforcement of the apex bank’s capabilities.
In its Article IV Staff Consultation Report, released in Washington, the IMF urged for the enhancement of central bank independence and communication to facilitate a successful transition to an inflation targeting regime. The report cautioned against amendments that could compromise the autonomy of the CBN.
Directors of the IMF supported the increase in minimum capital for banks and recommended the unwinding of regulatory forbearance introduced during the pandemic. They also applauded the resumption of the cash transfer program, stressing the need to scale it up to address acute food insecurity.
Furthermore, the IMF commended Nigeria’s efforts in reforming fuel price subsidies, unifying official foreign exchange windows, and focusing on revenue mobilization, governance, and monetary and exchange rate policy frameworks. Despite these reforms, the IMF noted near-term risks and emphasized the importance of steadfast and well-communicated reforms to restore macroeconomic stability and support inclusive growth.
The report maintained Nigeria’s 2024 growth forecast at 3.3%, citing improvements in services and trade sectors. However, it highlighted challenges such as fuel price inflation and the need for sustained reforms to address longstanding economic issues.
IMF Mission Chief for Nigeria, Axel Schimmelpfenning, underscored the importance of raising growth to positively impact living standards, acknowledging the complexity of resolving deep-rooted problems accumulated over years. He emphasized the need to scale up cash transfer programs and enhance government revenues to bolster service delivery.
Regarding monetary policy, the IMF welcomed recent interest rate hikes by the CBN to combat inflation, advocating for a data-driven approach to further rate adjustments. Additionally, the IMF advised the CBN to bolster foreign exchange reserves and implement a transparent framework for forex interventions aimed at reducing short-term volatility.
