The International Monetary Fund (IMF) has expressed strong support for the Central Bank of Nigeria’s (CBN) stringent monetary policies aimed at curbing inflation and ensuring economic stability, according to its 2025 Article IV Consultation Report. The IMF praised the CBN’s approach, recommending its continuation until inflation expectations stabilize.
At its 300th Monetary Policy Committee meeting on May 20, 2025, the CBN maintained the Monetary Policy Rate at 27.50%, with the Cash Reserve Ratio at 50% for commercial banks and 16% for merchant banks. These measures aim to reduce liquidity, stabilize the naira, and address inflation, which has reached multi-decade highs. The IMF also commended the CBN for halting deficit monetization and enhancing governance to support transparent inflation targeting.
The IMF highlighted Nigeria’s foreign exchange market reforms, noting improved liquidity and investor confidence. It urged the gradual removal of capital flow restrictions to enhance market efficiency while emphasizing the exchange rate’s role as a buffer against economic shocks.
Beyond monetary policy, the IMF stressed the need for fiscal restraint and structural reforms. It praised Nigeria’s tax reform efforts to boost revenue and create fiscal space for infrastructure, agriculture, and social programs. The Fund also called for expanded cash transfer initiatives to protect vulnerable populations during economic adjustments.
The report acknowledged progress in banking sector stability, including recapitalization efforts and financial inclusion initiatives. The IMF also commended Nigeria’s strides in strengthening its Anti-Money Laundering and Countering the Financing of Terrorism framework but urged further action to exit the FATF grey list.
To drive sustainable growth, the IMF recommended addressing structural challenges, such as improving food security, infrastructure, and healthcare, reducing bureaucracy, and enhancing climate resilience to foster private sector growth and inclusive development.
