The International Monetary Fund has reaffirmed its growth projection of 3.3% for Nigeria’s economy in 2024, compared to 2.9% last year. This forecast reflects improvements in the services and trade sectors.
However, the IMF noted that the growth outlook remains challenging for Africa’s most populous nation and leading oil producer. In March, food price inflation reached 40%, prompting concerns about food security.
According to the IMF mission chief for Nigeria, Axel Schimmelpfenning “If Nigeria grows at 3.3% that is just above the population dynamics, which is a big challenge.”
The Fund projected that fuel subsidies could be up to 3% of GDP this year due to the disparity between pump prices and their dollar cost, according to Schimmelpfennig. He further stated that officials are dedicated to gradually phasing out these subsidies within the next one or two years.
“The reforms are focused on how to raise that growth so that Nigerians can see real impacts on their living standards,” Schimmelpfenning said.
“We think a lot has happened. We also have to recognise that the problems built up over many years were quite severe. We can’t expect that everything is going to be resolved overnight,” he added.
Global rating agencies have upgraded Nigeria’s economic outlook as a result of reform efforts. Fitch, the latest agency to do so, has revised Nigeria’s outlook from stable to positive.
Schimmelpfenning noted that scaling up a cash transfer program and increasing government revenues to enhance service provision to citizens are key priorities.
In terms of monetary policy, the IMF commended the recent interest rate hikes by the Central Bank of Nigeria (CBN) to address rising inflation, calling for a data-driven approach for further rate adjustments.
The IMF encouraged the CBN to boost its foreign exchange reserves and suggested a transparent and balanced framework for forex interventions.
While the Nigerian currency was reported as the best-performing currency in the world, earlier in April, in February it was the worst-performing currency in the world, trading as high as N1,900 per US$.
However, the International Monetary Fund disclosed in April that this could be a pipe dream if Nigeria does not take on a fundamental approach to rejuvenating its economy. The IMF warned that the country’s economy could be at risk if it simply fails to produce.
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