World Bank, IMF Urge CBN To Tackle Inflation As Rate Hits 34.8%
The World Bank and the International Monetary Fund (IMF) have urged the Central Bank of Nigeria (CBN) to remain committed to its efforts to control inflation as Nigeria’s inflation rate surged to 34.8% in December, up from 33.6% in November.
During a panel session, Sameer Matta, the World Bank’s Senior Economist for Nigeria, stressed the importance of continued vigilance in inflation control by the CBN. “It is critical to stay the course on inflation control. The Central Bank must continue to ensure that inflation is kept in check,” Matta said.
He further emphasized the need for supply-side improvements, particularly in boosting agricultural productivity and enhancing connections between rural and urban areas. Matta also recommended revisiting trade policies, adjusting tariffs, and focusing on specific sectors to address inflationary pressures.
Matta cautioned that the failure to implement necessary reforms could have severe consequences, with fuel and foreign exchange subsidies each accounting for two percent of Nigeria’s Gross Domestic Product (GDP). “This amounts to five percent of GDP, which is extremely high,” he noted.
He likened the required reforms to difficult medical decisions, underlining the importance of continuing social protection programs and accelerating cash transfers to assist Nigeria’s most vulnerable populations.
Christian Ebeke, the IMF’s country representative in Nigeria, echoed the need for stronger coordination between fiscal and monetary authorities in tackling inflation. He commended the efforts of both the CBN and fiscal authorities to reduce inflationary pressures, while also highlighting the importance of addressing the social and economic impacts of reforms like fuel subsidy removal and the Naira reforms.
Ebeke underscored the importance of fiscal policies that complement monetary actions and the need for effective social protection measures to shield the most vulnerable groups. He also praised the CBN and fiscal authorities for their work in curbing deficit monetization and improving financial conditions.
