The proposed modification to the Act that established the Central Bank of Nigeria (CBN) has been advised against by the International Monetary Fund (IMF), which has instead recommended that the central bank be strengthened.
The worldwide organization’s Board of Governors’ Article IV Staff Consultation Report, which was made public in Washington yesterday, included the Fund’s viewpoint.
According to the statement, “Directors recommended bolstering central bank independence and communication to ensure a successful transition and supported the authorities’ intentions to shift to an inflation targeting regime.”
They advised exercising prudence when it came to changes to the Central Bank of Nigeria (CBN) Act that would impair the independence of the central bank.
They pushed the CBN to end the regulatory forbearance that was put in place during the pandemic and backed raising the minimum capital requirements for banks.
Directors praised the government for resuming the cash transfer programme and stressed how quickly it needs to be expanded in order to address severe food insecurity.
They applauded the government’s efforts to develop a comprehensive plan for raising revenue that includes expanding the tax base and strengthening tax enforcement.
They emphasised the significance of preserving exchange rate flexibility, increasing reserves, and maintaining a strict monetary policy stance in order to drive inflation downward.
“Directors applauded the elimination of foreign exchange (FX) market distortions and urged the authorities to keep enhancing the FX market’s operation, including the implementation of a well-thought-out framework for FX intervention.”
On February 29, 2024, the IMF Executive Board convened to wrap up their Article IV consultation with Nigeria. This was in response to the Staff Report from their mission to the country, during which they had meetings with the authorities in Lagos and Abuja from February 12–23, 2024.