The International Monetary Fund (IMF) has warned that high inflation rates create economic hardship in Nigeria.
In a January 2023 press briefing, IMF Division Chief Daniel Leigh stated that recent currency devaluations and naira weakness have contributed significantly to rising inflation, which hit 24.6% in 2023.
Leigh emphasised that reducing inflation “must become a top priority” for Nigeria. The Central Bank of Nigeria has raised interest rates to 18.8% over the past year to tighten monetary policy. The IMF forecasts this will help bring inflation down to 23% in 2024 and 15.5% in 2025.
However, Leigh cautioned that, along with tighter monetary policy, Nigeria must increase social spending to support its most vulnerable citizens. He advised boosting domestic revenue through improved tax administration and broadening the tax base.
On Tuesday, the IMF downgraded Nigeria’s 2024 economic growth projection to 3.0%, just below the government’s 3.76% target. The IMF expects 2.8% GDP growth for Nigeria in 2023.
Chief IMF Economist Pierre-Olivier Gourinchas attributed the downward revision to weaker-than-expected oil and gas output, partly due to maintenance issues in the sector.
The IMF has blamed declining Nigerian growth rates on reduced oil and gas production. In October 2022, it lowered 2023 projections to 2.9% from 3.3% in 2022.