IMF Warns CBN Over New Naira Policy

The International Monetary Fund resident representative in Nigeria, Ari Aisen, has expressed displeasure at the challenges facing the currency swap initiative of the Central Bank of Nigeria and called for a different approach.

This followed a Supreme Court judgment against the CBN’s cash swap policy that demanded Nigerians to return old naira notes from N100 and above for the newly redesigned ones.

He said, “In light of hardships caused by disruptions to trade and payments due to the shortage of new banknotes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline.”

In a separate statement after an official staff visit to Nigeria by the IMF, the multilateral organisation equally asked the CBN to continue tightening its monetary policy.

The statement read, “Looking ahead, directors recommended decisive fiscal and monetary tightening to secure macroeconomic stability, combined with structural reforms to improve governance, strengthen the agricultural sector, and boost inclusive sustainable growth.”

It added, “Directors urged decisive and effective monetary policy tightening to avoid a de-anchoring of inflation expectations.

‘’Noting recent increases in the policy rate, they encouraged the Central Bank of Nigeria to stand ready to further increase the policy rate if needed, and to implement additional actions, including fully sterilising central bank financing of fiscal deficits and phasing out credit intervention programs. Strengthening the CBN’s independence and establishing price stability as its primary objective is critical.”