By Joan Chioma Obinagwam
The International Monetary Fund’s (IMF) latest Article IV Consultation highlights a turning point for Nigeria’s economy. Years of instability are giving way to steady progress, thanks to bold reforms aimed at restoring fiscal credibility and macroeconomic balance. The IMF praised authorities for policies that have “improved macroeconomic stability and enhanced resilience.”
Confiance News gathered from the Central Bank of Nigeria (CBN) on Wednesday.
One of the cornerstone reforms is the renewed independence of the Central Bank of Nigeria (CBN), which has reined in reliance on the “Ways and Means” facility. The IMF acknowledged the “discontinuation of deficit monetisation” as a crucial step to “strengthen central bank governance to set the institutional foundation for inflation targeting.”
As monetary tightening continues, inflation has declined sharply from over 40% to 22.9% as of May 2025. The IMF commended the CBN for “appropriately maintaining a tight monetary policy stance, which should continue until disinflation becomes entrenched.”
FX overhaul garners approval
The IMF also “praised reforms to the foreign exchange market that supported price discovery and liquidity.” Under Governor Olayemi Cardoso’s leadership, the CBN ended the previous multiple exchange-rate system in favor of a transparent, market-driven model using the B-Match digital platform.
The impact has been notable: “gross and net international reserves increased in 2024, with a strong current account surplus and improved portfolio inflows.” The FX premium dropped from over 60% to under 3%, while reserves soared to $40.9 billion, covering more than eight months of imports. “Reforms to the FX market and foreign exchange interventions have brought stability to the naira,” said the IMF.
January 2025 also marked Nigeria’s return to the Eurobond market after a four-year hiatus—an outcome that reflects “strengthened investor confidence” and “a resumption of portfolio inflows.”
Strengthening the banking sector
As part of wider reforms, the CBN is increasing minimum capital for banks by March 2026—a move designed to bolster resilience, widen credit access, and support a $1 trillion economy. The IMF “recognised actions to strengthen the banking system… and efforts to boost financial inclusion and promote capital market development.”
Initiatives such as the Women’s Financial Inclusion Initiative (Wi-Fi) show a deliberate focus on equitable financial access.
Governance & future piorities
Anti-money laundering efforts were also acknowledged as the IMF “welcomed progress made in strengthening the AML/CFT framework,” while stressing the need to resolve shortcomings to exit the FATF grey list.
Still, challenges loom. Inflation, infrastructure gaps, fiscal slippages, and insecurity remain pressing. The IMF “highlighted the importance of tackling security, red tape, agricultural productivity, infrastructure gaps, including boosting electricity supply… and making the economy more resilient to climate events.”
Yet, reforms are seen as foundational for inclusive and lasting growth. “Fiscal and monetary tightening and exchange rate reforms contributed to improved macroeconomic balances,” the Fund stated, adding that “nimble policymaking… strong policy coordination and communication are key.”
Governor Cardoso summed it up aptly: “This assessment reaffirms that responsible, forward-looking policy choices matter… It is both an encouragement to stay the course, and a reminder that resilience and prosperity require continued discipline and vision.”
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