In a bid to tackle Nigeria’s high inflation rate head-on, the International Monetary Fund (IMF) has advised the Central Bank of Nigeria(CBN) to raise interest rates in the upcoming Monetary Policy Committee meeting.
Julie Kozack, the IMF Director of the Communications Department, made this remark during a press conference held on Thursday, as reported in the transcripts of the conference published on the IMF website on Saturday.
Kozack pointed out that the CBN’s strategy of removing excess liquidity from the system has contributed to the rising inflation in Nigeria.
She emphasized the urgency of addressing the high inflation, which reached over 27 percent in October on a year-on-year basis.
The IMF representative also acknowledged the steps taken by the Central Bank’s new leadership to address the issue by withdrawing excess liquidity from the system.
Kozack also highlighted the importance of increasing revenue in order to create fiscal space for social and development spending.
She noted that Nigeria’s current low revenue-to-GDP ratio of 9 percent is insufficient to support strong social safety nets and development spending to meet the country’s development needs.
She also commented on the 2024 budget, stating that it aims to reduce the fiscal deficit while creating space for priority spending on social and development initiatives.
The IMF’s recommendation for the CBN to raise the policy interest rate is part of an overall strategy to address the country’s high inflation and create fiscal space for essential spending.
