By Melvin Onwubuke
The international Monetary Fund recent post-financing assessment report concerning Nigeria, paints a bleak picture of the country’s economic future.
According to nairametrics, IMF expressed concerns that Nigeria’s inflation rate could rise to an unparalleled 44%, if the CBN fails to make significant steps in tightening it’s monetary policy.
The report highlights a disturbing sequence of events where the combined effects of inadequate monetary control, persistent pressure on the naira and adverse climate conditions could severely distrupt Nigeria’s economic stability.
The IMF projects a possible 35% depreciation of the naira in 2024, further aggravating the inflammatory pressure.
The IMF in the report said “An adverse scenario of an inflation-depreciation combined with a climate shock would increase risks to Nigeria’s capacity to repay the funds.”
“Given the absence of local production and the recent liberalization of commodity imports, the exchange rate would likely depreciate further by an estimated 35% in 2024 and contribute to a further sharp rise in inflation, peaking at 44%, before monetary policy is eventually tightened sharply” IMF noted.
However, it is important that the federal government addresses the urgent rising poverty and food insecurity which could threaten this repayment capacity, which could necessitate significant trade-offs.
