IMF Says Naira Depreciation Not Entirely Negative — Describes Policy Direction as ‘Positive’ for Nigeria
By Joseph Iyaji | Akahi News.
IMF Defends Naira Depreciation as a Tool for Economic Adjustment
The International Monetary Fund (IMF) has stated that the continued depreciation of the Naira should not automatically be viewed as a negative trend, noting that such movements can serve as an economic stabiliser when managed properly.
Speaking during the Global Fiscal Sustainability Report press briefing at the ongoing World Bank/IMF Annual Meetings in Washington DC, the Fund’s Financial Counsellor and Director of Monetary and Capital Markets, Mr Tobias Adrian, said that Nigeria’s currency movement reflects an ongoing adjustment process to restore balance within the domestic economy.
“A depreciating exchange rate is not necessarily a bad thing. It may actually be a good thing to restore equilibrium,” Adrian stated.
He explained that exchange rates serve as important buffers that help economies absorb shocks and adapt to global market realities, particularly in developing nations like Nigeria.
“Nigeria Is Making Positive Strides” — IMF
According to Adrian, the Nigerian government has made commendable policy efforts to stabilise the economy, strengthen transparency, and boost investor confidence.
“We have indeed seen in Nigeria many steps to strengthen policy frameworks, such as on the monetary policy side. We generally recommend moving towards more flexible exchange rates,” he said.
The IMF official noted improvements in foreign exchange transparency, revenue collection, and FX reserve management, which have collectively contributed to a drop in inflation and an overall positive macroeconomic outlook.
“Revenue collection has strengthened in Nigeria, and transparency in terms of FX reserve positions has improved. I think all of this has contributed to lower inflation — from more than 30% last year to about 23% this year — as well as improved FX reserve positions,” Adrian noted, describing Nigeria’s direction as “positive.”
Sub-Saharan Africa Faces Broader Economic Risks
Despite this optimism, the IMF warned that Sub-Saharan Africa still faces economic headwinds that could disrupt growth if global financial conditions tighten again.
Adrian cautioned that the region’s economies remain vulnerable to capital flow retracements, which could expose weak fiscal systems and debt vulnerabilities.
“While growth has been pretty strong during periods of easy financial conditions and resuming capital flows, it is possible that previous cycles of capital surges and retracements could return, exposing economies with vulnerabilities,” he said.
He urged African nations, including Nigeria, to continue focusing on sound fiscal management, debt sustainability, and structural reforms such as revenue mobilisation and economic diversification.
Analysts’ Perspective
Economic observers believe the IMF’s statement reflects a broader acceptance that exchange rate flexibility — though painful in the short term — can help countries like Nigeria align their currencies with real market forces.
Akahi News gathered that this shift supports the Tinubu administration’s recent monetary reforms, which aim to unify exchange rates and attract foreign investment.
However, experts warn that without addressing corruption, poor infrastructure, and policy inconsistency, the benefits of a weaker but stable Naira may not translate into real economic gains for ordinary Nigerians.
The IMF’s message underscores the delicate balance Nigeria must maintain between currency stability and market-driven reforms. While depreciation may appear alarming, the Fund insists it can serve as a corrective mechanism if complemented by disciplined fiscal policies and stronger governance.
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