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News Updated: February 21, 2024

Naira may further depreciate by 35% in 2024 – IMF

By Adekunle Obas
February 21, 2024
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The International Monetary Fund (IMF) has issued a warning regarding the depreciation of the Nigerian Naira, stating that it may depreciate by around 35 percent this year.

Additionally, the IMF projects that inflation rates could peak at 44 percent before monetary policy adjustments help to stabilize the situation.

The IMF's February 2024 Post–Financing Assessment and Staff Report highlights the current challenges facing Nigeria's economy. It notes that the nation's monetary policy may not be sufficiently tightened to bring inflation below 20 percent, especially with ongoing pressures on the Naira. 

The report also mentions the impact of adverse climate events, such as severe flooding, which have worsened weaknesses in agriculture and led to declines in output and increases in food prices.

In response to these challenges, the IMF recommends that Nigeria develop a comprehensive macroeconomic and growth strategy, with support from development partners. 

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This strategy should include aggressive monetary tightening, fiscal adjustments to restore macroeconomic stability, and measures to address climate adaptation.

The report also predicts a significant slowdown in Nigeria's economic growth, potentially falling to zero in 2024 and gradually recovering to two percent by 2028. Fiscal deficits are expected to increase, driven by factors such as social unrest and implicit fuel subsidies.

The IMF warns of risks related to Nigeria's net international reserves level, as well as potential external shocks that could impact external stability, poverty, and food insecurity. It underscores the importance of prioritizing debt service obligations while addressing urgent humanitarian needs.

Overall, the IMF's assessment highlights the need for decisive action to address Nigeria's economic challenges and ensure sustainable growth and stability in the face of various internal and external pressures.

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