THE INTERNATIONAL MONETARY FUND PREDICTS A DECLINE IN NIGERIA’S INFLATION RATE TO 23% BY 2024

The International Monetary Fund (IMF) envisions a reduction in Nigeria’s inflation rate to 23% in 2024 and further to 15.5% in 2025, as revealed by Daniel Leigh, IMF’s Division Chief of Research Department, during the recent press conference for the Fund’s World Economic Outlook (WEO) update.

As of December 2023, Nigeria’s inflation rate was recorded at 28.92%, having experienced a consecutive 11-month increase.

Discussing the impact of foreign exchange reforms implemented by the Central Bank of Nigeria (CBN) to combat inflation and stabilize the naira’s value, Leigh expressed optimism. He noted that the ” monetary tightening measures adopted by the CBN would contribute to reducing the inflation rate.”

Leigh highlighted the “weak naira as one of the factors driving inflation, particularly due to financial regulatory reforms. He emphasized that bringing down inflation is a top priority, and the CBN’s significant interest rate hike to 18.8% over the past year is expected to play a role in achieving this goal.” The IMF forecasts a decline in inflation from 24.6% in 2023 to 23% in 2024 and further down to 15.5% in 2025.

In addition to ongoing monetary tightening efforts, Leigh suggested that “Nigeria should prioritize revenue mobilization and broaden its tax base to support social programs. He stressed the importance of creating space in the budget for social support while maintaining fiscal sustainability through enhanced revenue administration and a widened tax base.”

News Source: Techeconomy