• IMF calls for Nigeria to act to exit grey list.
• Nigeria’s reforms slow inflation and stabilize FX market.
• Challenges in tackling inflation and fiscal deficits remain.
• Central Bank independence is key to economic reset.
• Headline inflation has dropped to 22.9 percent recently.

IMF Acknowledges Nigeria’s Economic Reforms

IMF Urges Nigeria to Take Action for Exit from Grey List The International Monetary Fund (IMF) has urged Nigeria to take proactive measures to escape the Financial Action Task Force’s grey list. Recently, the IMF acknowledged Nigeria’s economic reforms that have contributed significantly to slowing inflation rates and stabilizing the foreign exchange market. This reflects the country’s progress noted in their latest Article IV Consultation, which highlights the restoration of financial discipline and credibility as key achievements.

Significant Challenges Still Linger

Challenges Remain Amid Positive Developments Despite these commendations, Nigeria still faces considerable challenges that could hinder recovery and reform efforts. One major concern is inflation, which, while decreasing, has yet to reach satisfactory levels. In light of this, the IMF suggests that Nigeria needs to tackle security issues, bureaucratic inefficiencies, agricultural productivity, and infrastructure gaps, especially in electricity supply, health, and education to create a more resilient economy capable of withstanding climate impacts.

Central Bank’s Role in Economic Stability

Restoration of Central Bank Independence Key The restoration of the Central Bank’s independence is cited as a crucial element in Nigeria’s economic reset. After years of reliance on emergency funding mechanisms that led to excessive deficit monetization, the effects of the Central Bank’s decision to reduce reliance on these financial lifelines has become apparent. Reports show a drastic reduction in the ‘Ways and Means’ facility by nearly 90 percent, which the IMF views as a positive step toward stability and effective inflation targeting. This measured approach helped lower headline inflation from over 40 percent to approximately 22.9 percent by May 2025, indicating a commitment to maintaining a tight monetary policy until the effects of inflation are firmly under control.

In summary, the IMF’s recent assessment underscores Nigeria’s ongoing economic reforms aimed at exiting the FATF grey list. These reforms have shown tangible results in reducing inflation and stabilizing the foreign exchange market, although challenges such as security issues and fiscal deficits persist. As Nigeria navigates a complex global economic landscape, the importance of coordinated policy efforts is emphasized, highlighting the crucial balance between reform progression and economic stability.