The International Monetary Fund has approved the Central Bank of Nigeria's move to recalibrate its monetary policy stance, saying the adjustment was justified by the substantial decline in inflation. Speaking at a press briefing during the IMF and World Bank Annual Meetings in Bangkok, the IMF's Director of the African Department said Nigeria had made significant progress in lowering inflation from elevated levels and that the decision to reduce the real interest-rate burden was appropriate. However, he stressed that monetary conditions remain restrictive overall.
The IMF upgraded Nigeria's economic growth forecast for 2026 to 4.2 per cent, according to the Deputy Director of the African Department. This upgrade reflects benefits from improved international oil prices, which have boosted foreign exchange receipts and external reserves, supporting liquidity in the economy. Services emerged as the principal driver of domestic economic expansion, while declining inflation has improved the overall macroeconomic environment.
The Fund urged the Federal Government to reduce its reliance on oil revenue and strengthen domestic revenue mobilisation to create fiscal space for development priorities such as education and health infrastructure. The IMF also called for structural reforms to improve the business environment and attract private investment, while warning that broad-based energy subsidies disproportionately benefit wealthier households.
On social protection, the IMF recommended that the government phase out subsidies gradually and ensure savings are targeted towards vulnerable Nigerians rather than supporting products. The Fund said this approach would be more effective than abrupt subsidy withdrawal, particularly given the cost-of-living pressures households currently face.