IMF urges Nigeria to tackle FX volatility, inflation

The International Monetary Fund (IMF) has urged Nigeria to implement a robust foreign exchange intervention framework to curb excess volatility and maintain the gains of recent economic reforms. The IMF commended the Central Bank of Nigeria (CBN) for maintaining a tight monetary policy stance and encouraged the apex bank to continue in that direction until inflation was firmly under control .

By Rhalialt Arhuoizah

Key Recommendations:

- Implement a robust FX intervention framework: to contain excess volatility and ensure exchange rate stability
- Maintain tight monetary policy: until disinflation becomes entrenched, with a focus on containing inflationary pressures
- Neutral fiscal stance: government spending should focus on growth-enhancing investments, including infrastructure, agriculture, and social welfare
- Phase out capital flow management measures: in a carefully timed and sequenced manner to unlock greater FX market efficiency and reduce distortions
- Address structural barriers: including infrastructure deficits, insecurity, and agricultural productivity gaps to sustainably boost economic growth .

Recent Economic Developments:

- Inflation decline: Nigeria's inflation rate declined to 22.9% in May 2025, down from a 31% average in 2024, following naira stabilization and improvements in domestic food supply
- FX market reforms: recent reforms have improved price discovery, market liquidity, and investor sentiment, contributing to naira stability
- Economic growth: the IMF projects further decline in inflation in the medium term, contingent on continued policy discipline and easing retail fuel prices .