• Tuesday, May 21, 2024
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BusinessDay

How Nigeria gained the admiration of the World Bank, IMF

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Nigeria won rare plaudits from the World Bank and IMF during the spring meetings last week in Washington as the country’s structural reforms continue to gain global attention.

The 2024 Spring Meetings highlighted the global economy’s improved resilience, acknowledged by economic leaders worldwide.

Despite a global economic environment challenged by high inflation rates and ongoing geopolitical tensions, Nigeria has emerged as a regional leader in promoting sustainable economic practices.

The World Bank and IMF commended Nigeria’s efforts in tightening monetary policies, revising the country’s growth forecast upwards to 3.34 percent for this year – a reflection of the effectiveness of the administration’s economic policies.

Highlighting key initiatives that have turned around the economy at the IMF/World Bank Spring Meetings, Wale Edun, minister of finance and coordinating minister of the economy, said: “Our focus on agriculture, manufacturing, and electricity aims not only to stabilise prices but also to secure food and reduce dependency on imports.

“These initiatives, coupled with the inflation targeting policies of the Central Bank, are expected to reduce inflation by the second half of the year, which would allow for a potential reduction in interest rates,” Edun said.

The minister also noted that the government is committed towards ensuring the country’s currency maintains its position as a strong store of value.

There’s more help on the way for the naira which has gone from the world’s worst performing currency to the best in April.

Edun said the country qualified for a loan of $2.25 billion from the World Bank at 1 percent interest rate.

The federal government’s removal of the costly petrol subsidy and the unification of the exchange rate in 2023 has placed the country on the path of economic recovery.

Though the reforms have accelerated Nigeria’s headline inflation to a record of 33.2 percent in March, the International Monetary Fund (IMF) said it will decline to 23 percent by 2024 and then 18 percent in 2026.

Olayemi Cardoso, the central bank governor has also ramped up efforts to put the country’s economy back on track by clearing an inherited $7 billion backlog and hiking the monetary policy rate twice this year.

Cardoso raised the lending rate by a combined 600 basis points to 24.75 percent in a bid to tame the stubbornly high inflation.

The CBN chief also resumed the sales of $10, 000 US dollars to Bureau de Change operators in February every week, mandating them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

With all these measures, the naira, which was almost hitting N2,000/$ in February, saw a major turnaround.

The local currency hit a seven-month high last week, hitting N1,000/$ in street trading, before losing steam this week amid a stronger dollar.

The CBN’s policies have boosted liquidity, calmed the FX market and made it more transparent while sticking to its core mandate of price stability