The Central Bank of Nigeria (CBN) has been urged by the World Bank and the International Monetary Fund (IMF) to continue its persistent efforts to keep inflation under control.
In December, Nigeria’s inflation rate rose from 33.6 percent in November to 34.8 percent.
In a panel discussion, Sameer Matta, the Senior Economist for Nigeria at the World Bank, underlined the significance of the CBN’s emphasis on reducing inflation. Maintaining the current inflation control strategy is essential. “The central bank must keep up its efforts to control inflation,” Matta said.
Enhancing agricultural output and fortifying the connection between rural and urban areas are two examples of the supply-side reforms he emphasized as being necessary. Additionally, he recommended reviewing trade policies to target particular industries and modifying tariffs accordingly.
Given that gasoline and foreign exchange subsidies amount for 2% of Nigeria’s GDP each, Matta noted that the costs of not enacting changes are substantial.
“This represents a very high five percent of GDP,” he said.
He emphasized the significance of extending social protection programs and speeding up cash transfer programs to assist the most disadvantaged, comparing the required reforms to difficult medical decisions.
Cooperation between monetary and fiscal authorities
To effectively fight inflation, Nigeria’s country representative at the International Monetary Fund (IMF), Christian Ebeke, reaffirmed the necessity of collaboration between monetary and fiscal authorities.
In order to lessen inflationary pressures, he commended the central bank’s and fiscal authorities’ dedication to enhancing coordination.
Ebeke also emphasized how crucial it is to address how changes, such the elimination of fuel subsidies and Naira reforms, will affect distribution in order to safeguard the most disadvantaged groups. He emphasized the necessity of social safety nets and the role fiscal policies play in bolstering monetary efforts.
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He emphasized the value of open liability management, the advantages of securitization in spreading out maturities, and the CBN’s and fiscal authorities’ efforts to counteract deficit monetization and enhance financial conditions.
The National Bureau of Statistics had stated that the headline inflation rate in Nigeria had increased little to 34.80% in December 2024.
This represents a little increase of 0.20% above the rate of 34.60% in November 2024, mostly due to the higher demand for goods and services during the holiday season.
The headline inflation rate of 34.80% in December 2024 was 5.87% higher than the 28.92% rate in December 2023.
This year-over-year increase suggests that living expenses have increased significantly when compared to the same month last year.
