The International Monetary Fund (IMF) has backed the Central Bank of Nigeria’s (CBN) decision to reduce its benchmark interest rate, saying the country’s monetary policy remains restrictive despite the cut.
Zeine Zeidane, director of the IMF’s African Department, said Nigeria had made considerable progress in bringing inflation down from elevated levels, creating room to adjust interest rates and reduce the pressure caused by high real borrowing costs.
He made the remarks during a press briefing at the 2026 IMF and World Bank annual meetings in Bangkok, Thailand.
“Now, on the question on monetary policy, what I can say is that in the case of Nigeria, they have made significant progress towards lowering inflation because it has been coming from a high level, and they had a high real interest rate,” Zeidane said.
He described the CBN’s decision as appropriate, explaining that the adjustment would help normalise monetary policy and reduce the real interest rate.
“So, they decided to normalise the monetary policy to lower that real interest rate, which is appropriate in our view. It’s the right thing to do,” he said.
However, Zeidane cautioned that the reduction should not be interpreted as a shift towards an easier monetary policy, stressing that the overall stance remained tight.
“And it’s not easing yet because the stance itself remains a tight stance,” he added.
In September, the CBN’s Monetary Policy Committee reduced the Monetary Policy Rate (MPR) by 350 basis points, bringing it down from 26.5 per cent to 23 per cent.
The decision followed an extended period of high interest rates aimed at controlling inflation and stabilising the Nigerian economy.
IMF Urges Nigeria to Strengthen Non-Oil Revenue
Separately, Montfort Mlachila, deputy director of the IMF’s African Department, urged Nigeria to increase revenue collection outside the oil sector, despite improved foreign exchange earnings resulting from higher oil prices.
Mlachila said the rise in oil prices had boosted Nigeria’s foreign exchange receipts, strengthened its reserves and increased liquidity in the economy.
However, he warned that the country needed to develop more reliable domestic revenue sources beyond oil to finance essential services and infrastructure.
“Our advice for the government has always been to, on one side, mobilise more domestic revenue outside the oil sector to create fiscal space for education, health, infrastructure,” he said.
He also called for continued structural reforms to attract private investment and create employment opportunities.
According to Mlachila, Nigeria’s large domestic market, youthful population and technology-driven entrepreneurs offer significant opportunities for investors.
He added that improvements in governance, the business environment and economic integration would be necessary to accelerate economic growth and generate more jobs.
The IMF’s comments highlight the need for Nigeria to balance efforts to control inflation with measures that encourage investment, strengthen public finances and support long-term economic development.
