The World Bank and International Monetary Fund (IMF) have called on the Central Bank of Nigeria (CBN) to stay resolute in addressing rising inflation, which reached 34.8% in December 2024, up from 33.6% in November.
Recommendations for Inflation Control
During a panel session, Sameer Matta, the World Bank’s Senior Economist for Nigeria, emphasized the critical need for the CBN to maintain its focus on inflation management. Matta highlighted several strategies, including:
- Improving supply-side factors: Boosting agricultural yields and improving connectivity between rural and urban areas.
- Targeted trade policies: Adjusting tariffs and reviewing trade regulations to support specific sectors.
Matta also noted the high cost of inaction, pointing out that fuel and foreign exchange subsidies consume approximately 5% of Nigeria’s GDP, a financial burden that underscores the urgency of reform.
“These reforms may feel like tough medicine, but they are essential for sustainable growth,” Matta said, while stressing the importance of continuing social protection programs and cash transfers to cushion vulnerable populations.
IMF’s Perspective on Policy Coordination
Christian Ebeke, Nigeria’s IMF representative, praised the ongoing efforts by both the CBN and fiscal authorities to enhance coordination in fighting inflation. He emphasized key areas for improvement:
- Addressing social impacts: Ensuring that subsidy removals and exchange rate reforms protect the vulnerable through well-targeted fiscal policies.
- Strengthening monetary-fiscal alignment: Improving fiscal transparency, reducing deficit monetization, and spreading out debt maturities through securitization.
Ebeke commended the progress made in reducing inflationary pressures and highlighted the importance of comprehensive reforms to sustain these efforts.
Inflation Trends
According to the National Bureau of Statistics (NBS), the headline inflation rate climbed to 34.80% in December 2024, marking a marginal increase of 0.20% from November. This rise was attributed to heightened demand for goods and services during the festive season.
Year-on-year, inflation has surged by 5.87%, as the rate stood at 28.92% in December 2023, reflecting a significant increase in the cost of living over the past year.
Economic Outlook
The World Bank and IMF’s recommendations underscore the importance of structural reforms and social protection measures to address inflation sustainably. As Nigeria navigates these challenges, balancing economic stability with the welfare of its citizens remains crucial to fostering long-term growth.
