- By Halimah Olamide
The International Monetary Fund (IMF) has predicted further worsening of the value of Naira saying it foresees a 35% further depreciation.
The global financial body said the depreciation may bring the exchange to about N2,081 to $1 in the official market rate.
The Brenton Wood body said the development may bring inflation rate to about 44%.
For Nigeria to come out of the crisis, the organisation said the country would require a number of other fiscal adjustments which is capable of putting further pressure on the citizens.
IMF noted that NIgeria has been beset by a plethora of economic difiiculties ranging from acute food shortage rising from inability to maximise the agricultural potentials.
It noted that insecurity has made it impossible for farmers to be on their farms while a number of other climatic changes have worsened growth potentials.
The Nigerian food market is currently witnessing a huge shortage with prices of the few available items beyond the reach of common people.
A supposed middle-class appear to have been boxed into a corner as purchasing power reduced by more than 50% of their previous capacities.
According to the IMF in its publication, it said the uncertainty over Nigeria’s net international reserves level poses additional risks, as it is capable of imposing further shocks that impact external stability, poverty, and food insecurity.
The publication added that the fiscal deficit could increase above six percent of GDP in 2024 and 2025, driven in part by increased transfers to quell social unrest (one per cent of GDP) and a rise in the implicit fuel subsidy.
“With limited external financing options and higher expenditures, there is increasing use of CBN and domestic financing. The authorities implement expenditure measures in 2026, for example, phasing out the implicit fuel subsidy but the debt to GDP ratio still rises by six percentage points above the baseline by 2028.
The report stated: “The spike in inflation and rise in uncertainty trigger portfolio outflows, and Nigeria is unable to access Eurobond financing. Reserves decline to $17 billion in 2025. Obligations due under the RFI peak at over eight per cent of officially reported reserves.
“Nigeria would be able to repay the fund, even in the downside scenario. This assumes that the authorities continue to prioritise external debt service. However, debt service would compete directly with urgent humanitarian needs to tackle rising poverty and food insecurity that would need to be prioritised.
“Therefore, even assuming the authorities reserve the remaining SDR allocation for RFI repayments, trade-offs could be severe.
“The uncertainty over Nigeria’s net international reserves level poses additional risks, as would exogenous further shocks that impact external stability, poverty, and food insecurity.”