World Bank, IMF urge Nigeria to combat rising inflation

The World Bank and the International Monetary Fund (IMF) have urged the Federal Government and the Central Bank of Nigeria (CBN) to adopt a coordinated strategy to curb inflation in the country.

The National Bureau of Statistics (NBS) reported that Nigeria’s inflation rate surged to 34.8 percent in December, up from 33.6 percent in November.

Senior Economist for Nigeria at the World Bank, Sameer Matta who stated this during a panel session at the launch of the 2025 Macroeconomic Outlook of the Nigerian Economic Summit Group, emphasized the critical need for the CBN to focus on inflation control.

“It is critical to stay the course on inflation control,” Matta stated, adding that the CBN must ensure that inflation remains in check.

He highlighted the necessity for improvements on the supply side, including enhancing agricultural yields and strengthening the connection between rural and urban areas.

The Senior Economist also suggested that trade policies be reviewed to target specific sectors and adjust tariffs accordingly.

Matta noted that the cost of not implementing reforms is significant, with fuel and foreign exchange subsidies accounting for two percent each of Nigeria’s gross domestic product (GDP).

“This amounts to five percent of GDP, which is extremely high,” he remarked.

He likened the necessary reforms to tough medical decisions, emphasizing the importance of maintaining social protection measures and accelerating cash transfer programs to support the most vulnerable.

Christian Ebeke, Nigeria’s country representative at the IMF, stressed the need for coordination between fiscal and monetary authorities to effectively combat inflation.

He praised the commitment of both the CBN and fiscal authorities to strengthen coordination, which he said has helped reduce inflationary pressures.

Ebeke also highlighted the importance of addressing the distributional consequences of reforms, such as the removal of fuel subsidies and naira reforms, to protect the most vulnerable populations.

He underscored the role of fiscal policies in complementing monetary efforts and the necessity of social protection measures.

He commended the CBN and fiscal authorities for their efforts to curb deficit monetization and improve financial conditions, while also emphasizing the importance of transparent liability management and the benefits of securitization in spreading out maturities.

Regarding the issue of Ways and Means, Ebeke stated, “We should not have been in that position to start with. Cleaning up this big problem is taking time, and the persistent effect of the Ways and Means on inflation and, in general terms, on financial conditions. The CBN is trying to mop up liquidity. The practice of having deficit monetization, as has been practiced in Nigeria for years, is now over.”

He further elaborated, “Now, when it comes to the securitization of these, central banks around the world have a memorandum of understanding with the fiscal authorities on this type of liability management. The securitization has the benefit of spreading out the maturities. Also, this has been done transparently, so this is good.”

“With central bank independence and fiscal prudence, you should not be seeing this type of pressure on the macro economy, including the effect on the parallel exchange rate and inflation.” Ebeke added.

The summit themed ‘Stabilisation in Transition: Rethinking Reform Strategies For 2025 and Beyond,’

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