The International Monetary Fund has urged the Central Bank
of Nigeria to hike the interest rates in the next Monetary Policy Committee to
address the country’s high inflation rate.
The agency’s Director of the Communications Department,
Julie Kozack, disclosed this during a press conference held on Thursday. The
transcripts of the conference were published on the IMF website on Saturday.
Koszack noted that the CBN’s policy of mopping up excess
liquidity from the system has contributed to the growing inflation in the
country.
“You asked a specific question on inflation. Inflation in
Nigeria is running very high. It reached over 27 per cent in October, that is
the year-on-year number.
“The Central bank,
under its new leadership, has started to withdraw excess liquidity that was in
the system and contributing to high inflation.
“The next Monetary Policy Committee meeting should further
raise the policy interest rate. So, the Central bank is taking action to try to
address the high inflation problem. As we mentioned in our Article IV
Consultation, which was held in February of 2023, raising revenue from the very
current low revenue-to-GDP ratio of 9 percent is essential to create fiscal
space for social and development spending. 9 percent of GDP is a very low revenue
to GDP ratio, and it is really not high enough to be able to support strong
social safety nets, and development spending, to help protect vulnerable
households and also to meet Nigeria’s development needs,” she said
She also commented on the 2024 budget, stating that it “aims
to reduce the fiscal deficit while also creating space for these priority
spendings, both on the social side and also on the development side.”
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