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IMF predicts Nigeria’s inflation to drop to 18% by 2026

Published

8 months ago

April 17, 2024

The International Monetary Fund (IMF) has predicted that inflation rate in Nigeria will drop to 23 per cent in 2025 with a further drop to 18 per cent by 2026 from the current rate of 33.20 per cent.

The IMF, which made the protection in its Global Economic Outlook released on Tuesday at the ongoing IMF/World Bank Spring Meetings in Washington D.C, said Nigeria was moving in the right direction with economic reforms including exchange rate reforms which it believes contributed to the surge in inflation rate in March.

The report endorsed by
Division Chief, IMF Research Department, Daniel Leigh, noted that with oil prices being on the rise in part due to geopolitical tensions and services, inflation had remained stubbornly high in many countries, including Nigeria.

“We see inflation in (in Nigeria) declining to 23 per cent next year and then 18 per cent in 2026,” Leigh said.

“Growth in Nigeria, steady but actually rising this year, from 2.9 per cent last year to 3.3 percent this year. We have seen an expansion from the recovery in the oil sector, with a better security situation and also improved agriculture, benefiting from the better weather conditions and the introduction of dry season farming.

“So, there’s a broad based increase also in the financial sector, in the IT sector. Inflation, yes, it has increased.

“Part of this reflects the reforms, the exchange rate and its pass through into other goods from imports to other goods.

“So, this explains also why we revised up our inflation projection for this year to 26 per cent. But with the tight monetary policies and that interest rate increase, significant interest rate increases during February and March,” he added.

On his part, head of IMF Research Department, Pierre Olivier Gourinchas, said Nigeria has six to nine per cent inflation target which has been missed by over a decade, but he however, believes bringing inflation back to target should remain the priority for the country.

“There are stark divergences also between countries that call for careful calibration of monetary policy.

“Going forward, policymakers should prioritize measures that help preserve or even enhance the resilience of the global economy.

“A key priority is to rebuild fiscal buffers, especially in an environment with high real interest rates, modest growth, and elevated debts.

Unfortunately planned fiscal adjustments are often insufficient and could be derailed further given the record number of elections this year,” Gourinchas said.

Related Topics:Economy Featured IMF inflation Nigeria

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

1 day ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

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Libya’s eastern govt accepts petrol subsidy elimination

Published

1 day ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.