The International Monetary Fund (IMF) foresees a decline in Nigeria’s inflation rate, projecting it to be 23 percent in 2024 and further dropping to 15.5 percent in 2025. This revelation came from Daniel Leigh, the Division Chief of the Research Department at the IMF, during the press conference on the World Economic Outlook (WEO) update held on Tuesday.
As of December 2023, Nigeria’s inflation rate was recorded at 28.92 percent, persistently rising for 11 consecutive months. Responding to this concerning trend and the efforts made by the Central Bank of Nigeria (CBN) through foreign exchange reforms to curb inflation and stabilize the free fall of the naira, Leigh expressed optimism. He highlighted that the monetary tightening stance adopted by the apex bank is expected to contribute significantly to the reduction of the inflation rate.
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Leigh emphasized the impact of the weak naira, resulting from the financial regulator’s reforms, as one of the primary drivers of inflation. He pointed out the structural factors, including fiscal deficit financing, contributing to the high inflation rate. Leigh stressed that addressing inflation is a top priority, and the CBN has already implemented substantial interest rate hikes, reaching 18.8 percent over the past year. This, according to the IMF’s forecast, is anticipated to bring down inflation from 24.6 percent in 2023 to 23 percent in 2024 and further down to 15.5 percent in 2025.
While acknowledging the ongoing efforts through monetary tightening, Leigh urged Nigeria to prioritize revenue mobilization and broaden its tax base to provide essential social support. He underlined the importance of creating fiscal space for development spending while maintaining fiscal sustainability. In this regard, Leigh proposed a strategy that includes more revenue mobilization, a strengthened revenue administration, and an expanded tax base as essential measures to address the economic challenges.
