CBN’s rate cut appropriate, monetary stance still tight — IMF
International Monetary Fund Endorses Nigeria’s Monetary Policy Adjustments
BANGKOK, Thailand — The International Monetary Fund (IMF) has expressed support for the Central Bank of Nigeria’s (CBN) recent modifications to its monetary policy, citing significant progress in reducing inflation. The IMF indicated that although monetary conditions remain tight, the adjustments are timely and appropriate.
During a press briefing on the IMF’s Regional Economic Outlook for Sub-Saharan Africa on October 6, 2026, IMF African Department Director Zeine Zeidane noted that Nigeria’s decline in inflation has enabled the CBN to recalibrate its monetary stance. He emphasized that this does not equate to a shift toward monetary easing, as conditions are still restrictive.
“The CBN’s decision to lower the real interest-rate burden is justifiable given the improved inflation outlook,” Zeidane said. “However, the overall stance remains tight.”
In addition to monetary policy adjustments, the IMF called on the Nigerian government to seek increased revenue from non-oil sectors. It urges deeper structural reforms aimed at attracting private investment and generating jobs. The Fund emphasized the importance of redirecting savings from subsidy reforms to assist vulnerable populations in Nigeria.
Deputy Director of the African Department Montfort Mlachila defended the IMF’s revised forecast for Nigeria’s economic growth, which has been upgraded to 4.2 percent for 2026 from an earlier projection of 4.0 percent. Mlachila attributed this potential growth to rising international oil prices, which have enhanced foreign exchange inflows and bolstered external reserves.
“This growth is not solely the result of favorable external conditions but is also driven significantly by the services sector,” said Mlachila. “Moreover, the recent decline in inflation has contributed positively to the macroeconomic environment and liquidity.”
Despite the optimistic growth forecast, the IMF cautioned that Nigeria must decrease its reliance on oil revenues and enhance domestic revenue mobilization to finance essential development priorities. Zeidane stressed that the Nigerian government should focus on generating revenue outside the oil sector while continuing to pursue reforms that improve the country’s investment climate.
“Our recommendation remains clear: prioritize revenue mobilization from non-oil sources and implement structural reforms to enhance the business environment for the private sector,” Zeidane stated.
He recognized the potential of Nigeria’s young and dynamic population, characterizing the nation as an attractive market for investment. However, he highlighted the necessity of governance and business environment reforms to sustain economic growth and job creation.
The IMF’s recommendations come amid the Nigerian government’s ongoing efforts to stabilize the economy following substantial policy changes, including reforms to the exchange rate system and the removal of petrol subsidies, which have led to increased living costs and concerns about equitable distribution of reform benefits.
On the topic of social protection, Zeidane underscored the importance of prioritizing vulnerable citizens during the transition, a principle central to the IMF’s policy advice globally. He urged the government to ensure that savings from subsidy reforms are targeted to support low-income households.
“The focus should be on protecting those in greatest need rather than on broad-based subsidies that often disproportionately benefit wealthier households,” he said.
Zeidane recommended a gradual phase-out of subsidies, ensuring that savings are effectively redirected to aid those requiring assistance rather than supporting consumers who may not need financial help.
“The aim is to create a targeted support system for the most vulnerable members of society,” he concluded.
