IMF Applauds Nigeria’s Economic Reforms, Signals Recovery Momentum

The International Monetary Fund (IMF) has commended Nigeria’s ongoing economic reforms, describing them as bold, necessary, and indicative of a shift toward macroeconomic stability and long-term recovery.

In its just-released Article IV Consultation report, the IMF noted that recent structural reforms by Nigerian authorities have helped restore fiscal discipline, strengthen central bank independence, and improve the country’s financial credibility after years of volatility.

A key highlight of the IMF’s review is the Central Bank of Nigeria’s (CBN) decision to drastically cut back on the controversial “Ways and Means” facility—an overdraft mechanism previously used to finance government deficits. The Fund described this shift as a “discontinuation of deficit monetisation,” with the advances reduced by nearly 90% as of April 2025.

“These efforts are laying the institutional groundwork for a credible inflation-targeting regime,” the IMF stated, praising the CBN’s ongoing commitment to monetary tightening.

Inflation, which had spiked above 40%, has since eased to 22.9% as of May 2025. The IMF believes the current tight monetary stance should continue “until disinflation becomes entrenched.”

Foreign Exchange Reforms Get Global Attention

The report also praised Nigeria’s ambitious foreign exchange reforms. Under Governor Olayemi Cardoso, the CBN dismantled the long-standing multiple exchange rate system and adopted a unified “willing-buyer, willing-seller” model. Supported by a digital trading platform, B-Match, this framework has improved transparency and boosted liquidity in the market.

According to the IMF, these changes have significantly narrowed the gap between the official and parallel exchange rates—from over 60% to below 3%. Foreign inflows surged to $6.9 billion in Q1 2025, while gross external reserves peaked at $40.9 billion by the end of 2024, providing more than eight months’ import cover.

“These reforms have contributed to naira stability and improved investor sentiment,” the Fund noted.

In a further vote of confidence, Nigeria returned to the Eurobond market in January 2025 with its first issuance in four years—another milestone the IMF linked to renewed global investor trust.

Banking Sector and Financial Inclusion

The IMF also highlighted efforts to strengthen Nigeria’s banking system, including the CBN’s ongoing recapitalisation programme aimed at increasing banks’ minimum capital requirements by March 2026. This, the Fund said, would boost financial resilience, expand credit access, and support the ambition of building a $1 trillion economy.

Additionally, initiatives such as the Women’s Financial Inclusion Initiative (Wi-Fi) were acknowledged as important steps toward expanding banking access, particularly for underserved groups. The Fund noted the authorities’ broader commitment to enhancing financial inclusion and developing the capital markets.

Caution on Remaining Challenges

While progress is evident, the IMF stressed that challenges persist. It acknowledged improvements in Nigeria’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, but urged the government to address remaining gaps and exit the FATF grey list.

Other pressing concerns include infrastructure deficits, security threats, low agricultural productivity, and underfunding in health and education sectors. The IMF encouraged Nigerian policymakers to prioritise these areas, along with expanding electricity access and building climate resilience.

“The recent reforms should help establish a strong foundation for sustained and inclusive growth,” the report concluded, while also warning that “nimble policymaking and strong policy coordination” are essential in a rapidly evolving global economic landscape.

CBN Reacts: ‘Nigeria is Regaining Credibility’

Responding to the report, CBN Governor Olayemi Cardoso said the IMF’s assessment validates the tough decisions taken in recent months.

“At a time of global uncertainty, this assessment reaffirms that responsible, forward-looking policy choices matter,” Cardoso said. “It affirms that Nigeria is regaining credibility, anchoring expectations, and laying the foundation for inclusive, long-term growth.”

The IMF’s endorsement signals growing international confidence in Nigeria’s reform agenda and offers a measure of optimism as the country continues on its path to economic recovery.

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