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ABUJA, Nigeria – The International Monetary Fund endorsed monetary policy reforms implemented by Nigeria’s Central Bank Governor Olayemi Cardoso, citing improved macroeconomic stability and enhanced financial system resilience. The IMF report highlights a 90% reduction in deficit financing and significant foreign exchange market improvements.
CBN Cuts Government Deficit Financing by 90%
The Central Bank of Nigeria under Cardoso’s leadership reduced Ways and Means advances by nearly 90%, according to IMF data released Wednesday. This move ended the practice of directly financing government deficits, a policy the IMF called “critical to macroeconomic stability.”
The CBN restored operational independence from fiscal authorities, signaling institutional reform to international markets. Nigeria’s deficit monetization had previously undermined monetary policy effectiveness and contributed to inflationary pressures.
Foreign Exchange Premium Drops from 60% to 3%
Nigeria’s foreign exchange market reforms produced measurable results, with the currency premium falling from over 60% to below 3% following implementation of the “willing-buyer, willing-seller” framework.
Key FX market indicators show:
- Gross international reserves increased substantially
- Net international reserves rose significantly
- Current account recorded surplus position
- Foreign portfolio investment flows resumed
The IMF stated these reforms “brought stability to the naira” and improved price discovery mechanisms in currency trading.
Banking Sector Capital Requirements Rise
The CBN initiated banking sector reforms including increased minimum capital requirements for financial institutions. These measures aim to strengthen bank balance sheets and improve system-wide stability.
Financial inclusion programs expanded banking services to underbanked rural communities through mobile banking platforms and traditional branch networks. The central bank also promoted capital market development to provide alternative funding sources for Nigerian businesses.
Governor Cites Global Economic Uncertainty
Cardoso addressed the IMF assessment at a press conference in Abuja, stating: “At a time of global uncertainty, this assessment reaffirms that responsible, forward-looking policy choices matter.”
The CBN governor emphasized Nigeria’s goal to “regain credibility, anchor expectations, and lay foundations for inclusive, long-term growth.” The IMF endorsement provides validation for similar reform approaches across African economies.
Economic Impact on Nigerian Markets
The reforms affected multiple economic sectors, with stable exchange rates reducing import price volatility and improved banking sector stability expanding credit access for small businesses.
International investor confidence increased following the IMF assessment, potentially boosting foreign direct investment and portfolio flows into Nigerian markets.
By Abdullah Korede
