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IMF hails Nigeria’s reforms as signs of economic recovery emerge
The International Monetary Fund (IMF) has praised Nigeria’s ongoing economic reforms, noting that the country is making meaningful strides towards stability and recovery after years of volatility and policy missteps.
In its latest Article IV Consultation report, the Fund commended the Nigerian government for taking bold and politically challenging decisions aimed at restoring macroeconomic discipline and boosting investor confidence. According to the IMF, these reforms have “improved macroeconomic stability and enhanced resilience.”
A key element of Nigeria’s reform agenda is the restoration of the Central Bank of Nigeria’s independence, which had been eroded by years of unchecked fiscal interference. The CBN, under Governor Olayemi Cardoso, has drastically scaled back the use of the controversial “Ways and Means” facility—a tool previously used to finance government deficits outside of legal limits. As of April 2025, such advances have been slashed by nearly 90 percent.
The IMF applauded this step, describing it as “the discontinuation of deficit monetisation,” and a move that “strengthens central bank governance to set the institutional foundation for inflation targeting.”
The central bank’s commitment to tightening monetary policy is also bearing fruit. Headline inflation, which had soared above 40 percent, has now fallen to 22.9 percent as of May 2025. The IMF noted that the CBN’s policy stance was appropriate and should be maintained until the disinflation trend becomes firmly established.
FX reforms restore investor confidence
The Fund also gave high marks to reforms in the foreign exchange (FX) market. The CBN scrapped the country’s long-standing multiple exchange-rate regime in favour of a unified, market-driven model. The new “willing-buyer, willing-seller” framework, powered by a digital trading platform known as B-Match, has introduced transparency and improved liquidity.
The impact has been significant. The gap between official and parallel market exchange rates has narrowed sharply—from over 60 percent to below 3 percent—while FX inflows jumped to $6.9 billion in the first quarter of 2025. By the end of 2024, Nigeria’s external reserves had climbed to $40.9 billion, providing over eight months of import cover—well above international benchmarks.
“The reforms to the FX market and foreign exchange interventions have brought stability to the naira,” the IMF said.
Nigeria’s successful return to the Eurobond market in January 2025, after a four-year absence, was further evidence of regained investor trust. The IMF noted that the bond issuance marked “a resumption of portfolio inflows” and reflected “strengthened investor confidence.”
Strengthening the financial system
The IMF also acknowledged steps taken to shore up Nigeria’s banking sector. It welcomed the CBN’s ongoing recapitalisation plan, which aims to raise banks’ minimum capital by March 2026. This initiative, the Fund said, would ensure that banks are more resilient, better able to support credit growth, and prepared to finance Nigeria’s ambition of becoming a $1 trillion economy.
The CBN is also pushing for broader financial inclusion. Through initiatives such as the Women’s Financial Inclusion Initiative (Wi-Fi), the bank is expanding access to formal financial services, particularly via digital platforms and targeted financial literacy programmes for underserved groups.
Tackling financial crime and grey listing
On anti-money laundering and counter-terrorist financing (AML/CFT), the IMF noted progress in strengthening Nigeria’s framework. However, it stressed the need to address lingering gaps in order to exit the Financial Action Task Force (FATF) grey list, which subjects Nigeria to increased global monitoring due to weaknesses in its financial crime regime.
Challenges remain, but foundation is firm
Despite the progress, the IMF warned that Nigeria’s reform momentum must be sustained. It highlighted key risks, including persistent inflationary pressures, security concerns, infrastructure deficits, and limited fiscal space.
To fully unlock the country’s economic potential, the Fund advised more action in tackling red tape, boosting agricultural productivity, expanding power supply, and increasing public spending on health and education. Climate resilience and targeted social investments were also flagged as priorities.
“These reforms should help establish a strong foundation for sustained and inclusive growth,” the IMF said. It urged Nigeria to maintain policy discipline and coordination, especially given ongoing global uncertainties.
Governor Cardoso, reacting to the IMF report, said it was a clear validation of the government’s policy choices.
“At a time of global uncertainty, this assessment reaffirms that responsible, forward-looking policy choices matter,” he said. “It shows that Nigeria is regaining credibility, anchoring expectations, and laying the foundation for inclusive, long-term growth. It is both an encouragement to stay the course and a reminder that resilience and prosperity require continued discipline and vision.”