Nigeria’s financial future and the IMF report

Omeiza Bilal

In every difficulty, there is always a silver lining. And it is often said that there is light at the end of the tunnel. This is the Nigerian economy after tough decisions were taken by both the fiscal and monetary authorities in the country to redirect the economy to the path of prosperity.

At the conclusion of 2025 article IV consultation with Nigeria, the Executive Board of the International Monetary Fund commended the country’s monetary and fiscal authorities for implementing far-reaching reforms over the past two years.

In a statement after the consulation, the IMF noted that the reforms have helped to stabilise Nigeria’s macroeconomic environment, bolster resilience, and restore investor confidence.

According to the IMF, the Central Bank of Nigeria (CBN) was appropriately maintaining a tight monetary policy stance, urging the continuation of such measures until inflation is tamed. anchored. The Fund equally welcomed the ongoing recapitalisation policy and efforts to strengthen Nigeria’s financial inclusion and deepen capital market participation.

‎A major focus of the reform has been efforts to restore the Apex Bank’s independence, which significantly reduced its use of the controversial “Ways and Means” facility, an overdraft means previously accessed to fund budget deficits.

The IMF team also commended the efforts to strengthen the AML/CFT framework and stressing the importance of resolving remaining weaknesses to exit the FATF grey list, as soon as possible. They applauded discontinuing deficit monetisation and ongoing efforts to strengthen central bank governance to set the institutional foundation for inflation targeting.

The Article IV report stated that Fiscal performance improved in 2024, adding that revenues benefited from naira depreciation, enhanced revenue administration and higher grants, which more than offset rising interest and overhead spending.

According to the report, the Directors also lauded the steps taken by the authorities to build reserves and bolster market confidence. They praised the Bank’s reform in the foreign exchange market that supported price discovery and liquidity. They called for the implementation of a robust foreign exchange intervention framework focused on containing excess volatility, emphasising that the exchange rate is an important shock absorber.

These reforms aim at fixing the foreign exchange market and the intervention has brought stability to the Naira, according to the IMF, with foreign exchange inflow surging to $6.9 billion in the first quarter 2025. The reserves hit $40.9 billion at the end of 2024, which can adequately settle eight months of imports. It has further strengthened the gap between officially and parallel market to below percent.

The reforms should help to entrenched a solid foundation for sustained and inclusive growth, the fund noted. While Fiscal and monetary tightening and exchange rate reforms contribution has enhanced the macroeconomic balance, they observed that in the light of the challenges posed by an emerging global economic landscape, policy makers need to navigate this fast moving and volatile environment. Strong coordination and communication are essential, the Fund added.

Despite this progress, the IMF warned of lingering challenges. High inflation, infrastructure gaps, insecurity, and weak health and education systems. These they noted could threaten the recovery. It called for continued efforts to boost productivity, tackle red tape, expand electricity supply, and enhance climate resilience.

Commenting on the IMF report, CBN Governor Yemi Cardoso said, “At a time of global uncertainty, this assessment reaffirms that responsible, forward-looking policy choices matter. It affirms Nigeria is regaining credibility, anchoring expectations, and laying the foundation for inclusive, long-term growth. It is both an encouragement to stay the course, and a reminder that resilience and prosperity require continued discipline and vision.”

Cardoso further said that the report validates the country’s policy choice and underscores the need for ongoing discipline and vision.