The International Monetary Fund (IMF) has backed the Central Bank of Nigeria’s (CBN) monetary policy adjustment, describing it as appropriate amid declining inflation.
The Director of the IMF’s African Department, Zeine Zeidane, said this at the department’s news briefing during the ongoing IMF/World Bank Annual Meetings in Bangkok, Thailand.
Zeidane said Nigeria had made significant progress in reducing inflation, creating room for the CBN to adjust its monetary policy without adopting an accommodative stance.
He said the adjustment would lower the real interest rate but stressed that the overall monetary policy stance remained restrictive.
He also highlighted improvements in Nigeria’s macroeconomic conditions, supported by higher oil prices, increased foreign exchange receipts and rising external reserves.
Zeidane urged the government to increase non-oil revenue to create fiscal space for critical sectors, including education, healthcare and infrastructure.
He said Nigeria’s large market, young entrepreneurs and technology-savvy population offered investment opportunities if structural constraints were addressed.
He also called for reforms in governance, the business environment and economic integration to accelerate growth and create jobs.
On energy subsidies, Zeidane advised the government to direct savings from subsidy reforms towards vulnerable households rather than maintaining broad-based support. He said subsidies often disproportionately benefited wealthier people, limiting the assistance available to those who needed it most.
The Deputy Director of the IMF’s African Department, Montfort Mlachila, said improved external conditions had strengthened Nigeria’s growth prospects.
He said higher oil prices had increased foreign exchange receipts and reserves, contributing to improved liquidity in the economy.
Mlachila said the IMF projected Nigeria’s economy to grow by 4.2 per cent in 2026, up from 4.0 per cent in 2025, with growth expected to reach 4.3 per cent in 2027.
He attributed the projected growth partly to favourable external conditions, adding that the services sector remained the main driver of economic activity.
Mlachila said declining inflation since 2025 had also improved Nigeria’s macroeconomic conditions and foreign exchange availability.
He added that sustaining stronger growth would require deeper structural reforms, improved domestic revenue mobilisation and a better business environment to attract private investment.
In its latest Regional Economic Outlook, the IMF said foreign exchange market reforms and fuel subsidy reductions in Nigeria and Ethiopia had supported more stable macroeconomic conditions. It added that improvements in fiscal revenue and monetary frameworks had created a clearer basis for private investment across the region.
