The IMF noted that the naira is under pressure, and its value has been declining, even following exchange rate reforms implemented by President Bola Tinubu.
The naira's value has fallen significantly, reaching 1045 naira per dollar in the parallel market.
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Nigeria may seek more dollar loan according to IMF. Photo: Gazette[/caption]
Inflation in Nigeria remained high, standing at 26 percent in August.
High inflation rates can contribute to currency instability and economic challenges.
The IMF supported the Nigerian authorities' efforts, such as unifying different official exchange rate windows and lifting the ban on 43 items from accessing foreign exchange from the official window.
These measures were seen as positive steps towards a market-determined exchange rate regime.
The IMF recommended tightening monetary policy, which could involve raising the Monetary Policy Rate and mopping up excess naira liquidity.
They also stressed the need for more clarity on the Central Bank of Nigeria's dollar obligations to boost confidence in the foreign exchange market.
The IMF clarified that Nigeria, like any member country, could seek IMF financing if it sees it as a helpful measure to address external imbalances. However, as of the time of the statement, Nigerian authorities had not approached the IMF for financing.
The IMF expressed confidence in the new leadership of the Central Bank of Nigeria, led by Olayemi Cardoso, and the new Minister of Finance and Coordinating Minister of the Economy, Wale Edun, to make the right decisions to boost the country's economic fortunes. Both leaders outlined plans for fiscal and monetary initiatives to address economic challenges,
Punch reports.
The new leadership team of the Central Bank of Nigeria was planning to assess and potentially reform various policies and practices of the central bank to align with its core mandates and support economic growth.
The statement mentioned the government's economic policy proposals, fiscal reforms, and growth targets aimed at achieving a $1 trillion GDP within eight years, along with a focus on inflation control and foreign reserve management.
Naira plunges further
The naira has been on a downward trend since the Central Bank of Nigeria allowed it to float freely against the US dollar and other major global currencies in June.
The declining value of the naira is affecting manufacturers who are finding it increasingly challenging to access raw materials. As a result, some companies are contemplating laying off workers or even shutting down their operations.
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