IMF supports Tinubunomics and praises FG for its fiscal and monetary policies

The International Monetary Fund (IMF), the financial body, has endorsed the economic reforms implemented by the administration of President Bola Ahmed Tinubu, pointing to significant progress in addressing Nigeria’s economic and social challenges.

This was contained in the recent Article IV Consultation published on May 9, 2024, seen by Nairametrics.

IMF Executive Directors praised the government’s decisive actions in areas such as revenue mobilization, improving governance, and strengthening social safety nets.

The IMF’s view contrasts sharply with the view of many Nigerians who complain daily of high inflation, weakening purchasing power, lower wages and high income inequality.

Recommended Reading: IMF to Financial Group: Increase Cash Transfers to Poor Nigerians

What the IMF says

IMF Executive Directors praised Nigeria’s new administration for its “bold reforms” that aim to restore macroeconomic stability, reduce poverty, support social cohesion, and accelerate inclusive and resilient growth.

They highlighted the administration’s particular focus on revenue collection and the effectiveness of policy frameworks as critical to these improvements.

Executive directors agreed with the thrust of the staff evaluation. They welcomed the bold reforms implemented by the new administration and praised the authorities’ focus on revenue mobilization, governance, social safety nets and improving policy frameworks in the face of Nigeria’s significant economic and social challenges.

Given the downside risks, Directors stressed the importance of implementing strong, well-sequenced and well-communicated reforms to restore macroeconomic stability, reduce poverty, support social cohesion and pave the way forward.
the path to faster, more inclusive and resilient growth. Directors praised the authorities’ actions to control inflation and restore market confidence.

They highlighted the importance of maintaining a tight monetary policy stance to put inflation on a downward trajectory, maintain exchange rate flexibility and build up reserves. Directors welcomed the elimination of foreign exchange market distortions and encouraged the authorities to continue improving the functioning of the foreign exchange market, including through the adoption of a well-designed foreign exchange intervention framework. IMF

Tinbunomics receives support from the IMF

Inflation control and market confidence are at the forefront of the administration’s economic strategy, with the IMF highlighting the importance of maintaining tight monetary policy and flexible exchange rates to curb inflation.

The removal of foreign exchange market distortions was particularly welcomed, along with recommendations for a well-designed foreign exchange intervention framework.

Furthermore, the IMF supported Nigeria’s shift to an inflation targeting regime and recommended strengthening the independence of the Central Bank of Nigeria to ensure an effective transition. They also advised caution with any amendment to the CBN Act that could undermine the bank’s autonomy.

On the social front, the IMF praised the government for restoring the cash transfer program, essential to combat acute food insecurity. IMF Directors recognized the need to expand this initiative along with a comprehensive revenue mobilization strategy.

This strategy includes improving tax enforcement and broadening the tax base to generate crucial funds for development spending and social protection, all while maintaining debt sustainability.

The financial watchdog also urged continued regulatory reforms, recommending in particular an increase in minimum capital requirements for banks and the removal of regulatory forbearance measures introduced during the pandemic.

Directors acknowledged improvements in Nigeria’s anti-money laundering and counter-financing of terrorism (AML/CFT) framework and supported efforts to exit the Financial Action Task Force (FATF) gray list.

As Nigeria works to improve its business environment, the IMF emphasized the importance of reforms that develop human capital, boost agricultural productivity, and build climate resilience. These measures are considered essential to boost investor confidence, unlock Nigeria’s growth potential and diversify its economy.

The IMF’s supportive stance on President Tinubu’s economic policy framework suggests a positive outlook for Nigeria’s economic trajectory, recognizing that the administration’s efforts are critical in guiding the country through its current economic challenges.

In a question and answer session with a journalist, the IMF also weighed in on the controversial 0.5% cybersecurity tax, but avoided commenting on whether they supported it or not.