The International Monetary Fund (IMF) has recommended that the Central Bank of Nigeria (CBN) consider a further increase in the Monetary Policy Rate (MPR) at the next meeting of its Monetary Policy Committee (MPC).JAMB Result
This advice was given by the IMF’s Director of Communications, Ms. Julie Kozack, in Washington DC, United States of America.
Ms. Kozack acknowledged the efforts of the CBN in addressing the country’s high inflation rate, which is currently over 27 percent, through liquidity mop-up measures. These efforts are part of a broader strategy to stabilize the Nigerian economy and curb inflationary pressures.
Additionally, Ms. Kozack highlighted the policy actions of President Bola Tinubu, particularly regarding the removal of fuel subsidies and the unification of exchange rates. These policy decisions are significant as they have direct implications for economic stability and fiscal balance in Nigeria.
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The IMF’s recommendation for a further increase in the MPR, a key interest rate set by the CBN, indicates a continued focus on controlling inflation. Adjusting the MPR can influence borrowing costs, consumer spending, and overall economic activity. Such a move would be aimed at tightening monetary policy to further address inflation, which remains a pressing concern for the Nigerian economy.informationguidenigeria
As the CBN prepares for its next MPC meeting, the consideration of the IMF’s recommendation will be critical in its decision-making process, balancing the need to control inflation with the overall health and growth of the Nigerian economy.
A transcript of her response to a question on Nigeria, obtained from the institution’s websites read in part, “On Nigeria, President Tinubu has implemented two bold and important reforms shortly after taking office.
“The first is on fuel subsidies. Nigeria’s fuel subsidies were costly, especially for the budget, and not well targeted to provide relief for vulnerable households, and so this was rectified. And the second was unifying of the official exchange rate and that removed long standing distortions of the multiple exchange rate system.NYSC Portal
“You asked a specific question on inflation. Inflation in Nigeria is running very high. It reached over 27 percent in October, that is the year-on-year number.
“The Central bank, under its new leadership, has started to withdraw excess liquidity that was in the system and contributing to high inflation.
“The next Monetary Policy Committee meeting should further raise policy interest rate. So, the Central bank is taking action to try to address the high inflation problem. As we mentioned in our Article IV Consultation, which was held in February of 2023, raising revenue from the very current low revenue to GDP ratio of 9 percent is essential to create fiscal space for social and development spending.JAMB Portal
9 percent of GDP is a very low revenue to GDP ratio, and it is really not high enough to be able to support strong social safety nets, and development spending, to help protect vulnerable households and also to meet Nigeria’s development needs.
” The 2024 budget aims to reduce the fiscal deficit while also creating space for these priority spendings, both on the social side and also on the development side.”