IMF Tasks CBN On Extension Of Naira Swap Policy

The International Monetary Fund (IMF) has tasked the Central Bank of Nigeria (CBN) with the extension of the naira swap policy.

This is coming in the wake of the challenges faced by Nigerians across the country over the banknote swap process.

The IMF on Wednesday said the government needed to make bold fiscal reforms to create the needed policy space, secure public debt, and reduce vulnerabilities.

This was stated in a report titled ‘IMF Executive Board Concludes 2022 Article IV Consultation with Nigeria’ published on its website.

It explained that despite rising oil prices, the nation’s fiscal deficit was estimated to have widened further in 2022, mainly due to high fuel subsidy costs.

It added that while the current account might have improved in 2022, foreign currency reserves declined because of capital outflow pressures.

“In light of hardships caused by disruptions to trade and payments due to the shortage of new banknotes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline.”

"Nigeria has missed out on the opportunity to reap the benefits from higher global oil prices in 2022.

"It said the government needs to take decisive fiscal and monetary tightening to secure macroeconomic stability, combined with structural reforms to improve governance, strengthen the agricultural sector, and boost inclusive, sustainable growth.

“Directors highlighted the need for bold fiscal reforms to create needed policy space, put public debt on sound footing, and reduce vulnerabilities.

“They urged the authorities to deliver on their commitment to remove fuel subsidies by mid-2023, and to increase well-targeted social spending. Strengthening revenue mobilization, including through tax administration reforms, expanding the tax automation system and strengthening taxpayer segmentation, and improving tax compliance is also a priority," the report read.