IMF offers Nigeria dollar loan to help stabilise falling naira

Naira under pressure: Nigeria considers seeking dollar loan - IMF
Naira under pressure: Nigeria considers seeking dollar loan - IMF

The International Monetary Fund (IMF) has offered Nigeria dollar loan to help stabilise the naira currency as the largest black nation on earth is presently struggling to meet up its forex demand. The Washington-based Fund however adds that recent exchange reforms and other economic policy changes taken by the government authorities were in order.

The International Monetary Fund (IMF) has acknowledged the pressure on the Nigerian naira and expressed support for Nigeria’s recent exchange reforms, including the removal of an eight-year foreign exchange ban on items like cement, rice, and poultry products.

However, the IMF noted that inflation in Nigeria remained high at 26 percent in August, and the naira continued to face pressure, plunging to 1045/dollar.

IMF offers Nigeria monetary policy guidance, dollar loan

While the IMF recommended tightening monetary policy and raising the Monetary Policy Rate to maintain market confidence, it mentioned that Nigeria could seek IMF financing (dollar loan) to address external imbalances but had not approached the IMF with a request for financing.

The IMF expressed confidence in Nigeria’s new Central Bank Governor, Olayemi Cardoso, and Finance Minister Wale Edun, to make decisions to boost the country’s economy.

The recent exchange rate reforms in Nigeria, which led to the naira’s depreciation and removal of forex bans on key items, have been supported by the IMF. However, it noted that high inflation and pressure on the naira persist.

Tightening monetary policy, raising the Monetary Policy Rate, and clarifying Central Bank of Nigeria dollar obligations were recommended to enhance market confidence.

The IMF mentioned that Nigeria has the option to seek IMF financing but hasn’t made such a request.

The new leadership team at the Central Bank of Nigeria is reviewing policies to reform the bank and boost economic growth.

The Central Bank of Nigeria’s new governor, Olayemi Cardoso, has outlined challenges facing the bank and proposed measures to address them, including evidence-based monetary policies, creative financing options to clear the forex backlog, and limits on fiscal side interventions.

The new leadership team aims to reposition the Central Bank as a catalyst for economic growth and development, supporting Nigeria’s economic growth goals.

The Economic Policy Proposals of the Nigerian administration target achieving a $1 trillion GDP within eight years through fiscal reforms and growth targets.