Rampant inflation is causing considerable challenges in Nigeria, according to recent revelations by the International Monetary Fund (IMF).

During the January 2024 World Economic Outlook Update press briefing, Daniel Leigh, the Division Chief of the Research Department, pointed out that ongoing reforms in the country have resulted in the depreciation of the currency, particularly the weakening of the naira, contributing to the surge in inflation.

Leigh emphasized that besides the currency depreciation, structural factors, such as fiscal deficit financing, are also contributing to the high inflation.

Recognizing the adverse impact on the populace, he stressed the necessity of prioritizing efforts to reduce inflation, noting that the Central Bank of Nigeria has taken measures, including significant interest rate hikes, to aid in this process.

Highlighting the need for a comprehensive strategy, Leigh suggested that alongside monetary tightening, the country should focus on social support through budget allocation.

He underscored the challenge of creating space for development spending while maintaining fiscal sustainability, emphasizing the importance of revenue mobilization, strengthened administration, and a broader tax base.

In its January World Economic Outlook update, the IMF downgraded Nigeria’s economic growth projections for 2024 to 3.0 percent and estimated a growth of 2.8 percent in 2023.

Pierre-Olivier Gourinchas, the IMF’s chief economist, mentioned a slight downward revision for 2024 but kept the forecast for 2023 unchanged.

The IMF attributed Nigeria’s sluggish growth to weaker oil and gas production, as highlighted in its October World Economic Outlook update.

It’s worth noting that the IMF’s growth projections significantly differ from the more optimistic 3.76 percent growth expected by the Federal Government.