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

Published

7 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 mission concludes 4th loan program assessment in Egypt

Published

3 days ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

5 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.