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IMF predicts Nigeria’s inflation rate to drop to 23%

Published

10 months ago

February 1, 2024

Nigeria’s inflation rate is expected to drop to 23% in 2024, and 15.5% in 2025 according to the International Monetary Fund (IMF).

This was revealed by Daniel Leigh, head of the World Economic Studies division in the IMF’s Research Department which produces the World Economic Outlook (WEO), during Tuesday’s WEO update press conference. As of December 2023, Nigeria’s inflation rate was 28.92 percent and had been rising for 11 months.

Leigh stated that the apex bank’s monetary tightening posture would contribute in lowering the inflation rate in response to the foreign exchange measures implemented by the Central Bank of Nigeria (CBN) to control inflation and the free fall of the naira.

Leigh stated that the weak naira as a result of the banking regulator’s reforms is one of the factors contributing to inflation. He said: “Now there’s also structural factors behind that high inflation, including, you know, on the fiscal side, financing of the deficit. But this is clearly creating hardship. The perspective that we have is bringing down inflation is top priority.

“And the CBN has already raised interest rates significantly over the past year to 18.8 percent. So that is the monetary tightening that is helping in our forecast to bring inflation down from 24.6 percent in 2023 percent, to 23 percent this year, and then closer to single digits into 2025 at 15.5 percent.”

Leigh contends that Nigeria should emphasise revenue mobilisation and expand its tax base in order to finance social services, even as it continues to tighten its monetary policy in an effort to combat inflation.

“On top of conquering inflation through monetary tightening, there’s also a need to provide social support through the budget and creating the space for that is the challenge.

“Our perspective is that more revenue mobilisation, strengthening revenue administration, widening the tax base, are what are going to bring in space for development spending while safeguarding fiscal sustainability,” Leigh added.

Related Topics:Featured IMF Inflation rate Nigeria

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Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

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MTN financial report reveals drop in group service revenue

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.