Reversing years of economic volatility, the International Monetary Fund’s latest Article IV Consultation affirms a new reality: Nigeria is making meaningful progress following a series of significant structural reforms to restore financial discipline and credibility. The IMF commended Nigeria’s authorities for bold and politically difficult policies that have “improved macroeconomic stability and enhanced resilience.”
A critical pillar of Nigeria’s economic reset has been the restoration of central bank independence. After years of excessive fiscal influence for deficit financing, the Central Bank of Nigeria (CBN) has curtailed the use of the “Ways and Means” facility – an emergency funding channel that ballooned beyond statutory limits. As of April 2025, these advances have been cut by nearly 90 percent, demonstrating what the IMF called the “discontinuation of deficit monetisation” and a step to “strengthen central bank governance to set the institutional foundation for inflation targeting.”
The CBN’s commitment to price stability is yielding tangible results. Headline inflation, which peaked above 40 percent, dropped to 22.9 percent in May 2025. The IMF noted that the Central Bank is “appropriately maintaining a tight monetary policy stance, which should continue until disinflation becomes entrenched.”
IMF Applauds FX Reforms
As stated in the IMF Executive Board Assessment, the Fund also “praised reforms to the foreign exchange market that supported price discovery and liquidity.” The CBN, under the leadership of Governor Olayemi Cardoso, dismantled the long-standing multiple exchange-rate regime, replacing it with a “willing-buyer, willing-seller” framework supported by a digital trading platform (B-Match).
The results have been transformative. As the IMF noted, “gross and net international reserves increased in 2024, with a strong current account surplus and improved portfolio inflows.” The FX premium, or gap between official and parallel markets, has fallen from over 60 percent to below 3 percent. FX inflows have surged to $6.9 billion in Q1 2025, and external reserves climbed to a peak of $40.9 billion at the end of 2024, providing over eight months of import–well above benchmark thresholds. “Reforms to the FX market and foreign exchange interventions have brought stability to the naira,” the IMF noted.
In January 2025, Nigeria successfully returned to the Eurobond market, its first issue in four years, reflecting, as the IMF noted, “strengthened investor confidence” and “a resumption of portfolio inflows.”
The Fund “recognised actions to strengthen the banking system, including the ongoing process of increasing banks’ minimum capital,” as stated in the IMF Executive Board Assessment. It also “welcomed the authorities’ efforts to boost financial inclusion and promote capital market development.”
The CBN’s recapitalisation plan will see banks’ minimum capital raised significantly by March 2026. This move is designed to ensure banks can absorb future shocks, deepen credit access, and support the planning for a$1 trillion Nigerian economy.
At the same time, Governor Cardoso’s team is expanding access to banking services for previously excluded demographics through digital platforms and financial literacy programmes, such as the Women’s Financial Inclusion Initiative (Wi-Fi).
‘Strong Foundation’
As stated in the IMF Executive Board Assessment, the Fund “welcomed progress made in strengthening the AML/ CFT framework”, Anti-Money Laundering and Combatting the Financing of Terrorism. It “stressed the importance of resolving remaining weaknesses to exit the FATF grey list,” a designation for jurisdictions under increased monitoring by the Financial Action Task Force due to gaps in their anti-financial crime regimes.
Further significant challenges remain. Inflation, though declining, remains a burden. Infrastructure deficits, insecurity, and fiscal slippages could derail progress.
The Fund “highlighted the importance of tackling security, red tape, agricultural productivity, infrastructure gaps, including boosting electricity supply, as well as improved health and education spending, and making the economy more resilient to climate events.”
Recent reforms “should help establish a strong foundation for sustained and inclusive growth,” the IMF noted. “Fiscal and monetary tightening and exchange rate reforms contributed to improved macroeconomic balances.” The IMF also noted that in light of the challenges posed by an evolving global economic landscape, “nimble policymaking is needed to navigate this fast-moving and volatile environment. Strong policy coordination and communication are key.”
Reflecting on the IMF report, Governor Cardoso commented: “At a time of global uncertainty, this assessment reaffirms that responsible, forward-looking policy choices matter. It affirms that Nigeria is regaining credibility, anchoring expectations, and laying the foundation for inclusive, long-term growth. It is both an encouragement to stay the course, and a reminder that resilience and prosperity require continued discipline and vision.”
