IMF: Acknowledging CBN’s reforms impact on economic growth, exchange rate stability
The International Monetary Fund (IMF) has acknowledged the positive impact of the Central Bank of Nigeria (CBN)-led economic reforms in Nigeria. The declining inflation rate, naira stability, rising foreign reserves, economic buffers and other supportive domestic factors are listed as significant benefits from the exchange rate reforms and foreign investor-friendly policies. These, the CBN Governor, Olayemi Cardoso said, ensured that higher tariffs impact on the economy remained subdued and supported IMF’s two-year upward growth revision for the Nigeria economy.
The verdict from the IMF that Nigeria’s economy remained strong in the face of global headwinds from trade tariffs, oil prices decline, prolonged financial markets uncertainty and corrections did not surprise many stakeholders.
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For the CBN Governor, Olayemi Cardoso, there were strategic efforts taken by both monetary and fiscal authorities that provided strong buffers for the economy and triggered IMF growth revisions for the country.
Speaking during the Intergovernmental Group of Twenty-Four (G-24) press briefing at the 2025 IMF/World Bank Annual Meetings in Washington DC, US, the CBN said that Nigeria’s economy has been fully restructured and resilient, with huge buffers against global risks.
Cardoso, who is the leader of the Nigeria delegation at the meetings, said the naira, has equally emerged as a competitive currency, with the economy witnessing positive trade balances and large businesses moving from imports to export of locally produced goods and commodities.
On the impact of the trade tariffs on the domestic economy, he said the tariffs are less of problems for the country.
“And I think we were very fortunate, because a lot of the things that were needed to have been done, we did them much earlier, and as a result of that, we’re able to create resilience and buffers against potential shocks,” he stated.
“And for us again, oil is basically the only commodity that was so exposed to the tariffs, and the impact of that was relatively modest. We now have a more competitive currency with the results that, for once, we have a situation where we have a positive balance of trade surplus, and we expect it to be six per cent in GDP for some time,” he said.
“So basically, what is happening is a complete restructuring of the economy, where we are encouraging people to go into domestic production, and, of course, discouraging imports,” he added.
Cardoso explained that oil was the oil commodity that was exposed to the trade tariffs, but the impact was equally modest.
“So, and of course, in terms of anchoring expectations, we found that those who followed the Nigerian economy were fairly comfortable. And for us, again, oil is basically the only commodity that was so exposed, and the impact of that was relatively modest,” he said.
In his remarks, G-24 Chairman, Pablo Quirno noted that recent adverse shocks in global economy have left growth below pre-pandemic levels, with rising policy uncertainties creating substantial medium-term headwinds.
“Emerging market and developing economies have faced deteriorating terms of trade, reduced export volumes, and declining foreign currency earnings. Many of these countries have implemented domestic policies to mitigate uncertainty, but constrained policy space underscores the urgent need for collective solutions supported by multilateral institutions,” he said.
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Nigeria’s revised growth for 2025, 2026
The IMF also gave a positive growth forecast of 3.9 per cent to Nigeria in 2025, and 4.1 per cent in 2026.
In its World Economic Outlook (WEO) report for October 2025 , the
IMF Economic Counsellor Pierre-Olivier Gourinchas, said the Fund based its outlook for Nigeria on several improving macroeconomic indicators and supportive domestic factors.
He said factor responsible for the higher growth revision include improved oil production, rising investor confidence, a supportive fiscal stance, and given its limited exposure to higher US tariffs.
According to him, the Fund also listed the stability in the exchange rate, rising foreign reserves and rebasing of the Gross Domestic Product (GDP) as significant factors expected to propel the Nigeria economy forward in 2026.
Aside Nigeria, many other economies see significant downward revisions because of the changing international trade and official aid landscape.
“Whereas growth in Nigeria is revised upward on account of supportive domestic factors, including higher oil production, improved investor confidence, a supportive fiscal stance in 2026, and given its limited exposure to higher US tariffs, many other economies see significant downward revisions because of the changing international trade and official aid landscape,” he said.
He said that the 10 to 12 per cent weakening of the dollar has helped financial conditions in many emerging market economies, especially countries that have dollar denominated debt. He added that local currency recovery and dip in inflation figures have also been supported by weakening dollar.
“The depreciation of the dollar also helps a number of these countries on inflation front, because a lot of goods are invoiced in those dollars, and so the pricing dollar remains constant, but the dollar itself is weaker. This helps to reduce input prices, and lead to drop in inflation,” he said.
IMF Deputy Director in the Research Department, Petya Koeva Brooks, said that many low-income countries in sub-Saharan Africa benefited from preferential access to the US market under the African Growth and Opportunity Act, which expired in September.
She explained that in sub-Saharan Africa, growth is expected to remain subdued, unchanged in 2025 from 4.1 percent in 2024, before picking up to 4.4 percent in 2026.
“This is an upward revision relative to the April 2025 WEO forecast by a cumulative 0.5 percentage point, but a downward revision of 0.1 percentage point compared with the October 2024 WEO,” she said.
According to the WEO report, the global economy is adjusting to a landscape reshaped by new policy measures.
It projected global economy growth to slow from 3.3 per cent in 2024 to 3.2 per cent in 2025 and 3.1 per cent in 2026, with advanced economies growing around 1.5 per cent and emerging market and developing economies just above four per cent.
It said that some extremes of higher tariffs were tempered, due to subsequent deals and resets.
“But the overall environment remains volatile, and temporary factors that supported activity in the first half of 2025—such as front-loading—are fading. As a result, global growth projections in the latest World Economic Outlook (WEO) are revised upward relative to the April 2025 WEO but continue to mark a downward revision relative to the pre-policy-shift forecasts,” the report said.
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Likewise, inflation is projected to continue to decline globally, though with variation across countries: above target in the United States—with risks tilted to the upside—and subdued elsewhere.
“Trade diplomacy should be paired with macroeconomic adjustment. Fiscal buffers should be rebuilt. Central bank independence should be preserved. Efforts on structural reforms should be redoubled.”
“The tactics that keep activity seemingly resilient in the short term, such as trade diversion and rerouting, are costly. Suboptimal reallocation of productive resources, technological decoupling, and limitations on knowledge diffusion are bound to restrain growth over the longer term,” it said.
The Fund said the global economy has shown resilience to the trade policy shocks, including because these shocks materialized on a smaller scale than expected at their onset, but the drag from shifting policies is becoming visible in more recent data. There have been several common drivers of growth patterns across countries but also some important idiosyncratic factors.
How it started
Speaking at the Lagos Business School leadership programme in Lagos, Cardoso, explained that when he assumed office as Governor in 2023, Nigeria’s economy faced formidable headwinds.
“Inflation was spiraling, external reserves were strained, investor confidence was shaken, and nearly every macroeconomic indicator was under pressure. It was a moment that demanded not just technical skill, but leadership rooted in courage, credibility, and accountability. We had to act decisively,” he said.
To rein in inflation, the apex bank tightened policy aggressively, raising rates by more than 800 basis points and strengthening liquidity management.
“We restored orthodoxy by halting central bank financing of government beyond statutory limits and re-anchoring monetary policy on its core mandate,” he said.
“On foreign exchange, we introduced a willing-buyer, willing-seller framework, unified exchange rate windows, and cleared the backlog of verifiable FX commitments, restoring market confidence. We strengthened reserves, now standing above US$42 billion, and created new channels for diaspora remittances and investments, including the Non-Resident BVN platform, which allows Nigerians abroad to open accounts seamlessly from anywhere in the world,” he stated.
For Nigeria, Real GDP expanded by 4.2 per cent in the second quarter of 2025, signaling the re-emergence of growth momentum.
“Capital flows are rebounding, sovereign credit ratings have improved, as seen in the Credit Default Swap curve, and the naira is beginning to stabilise. Together, these shifts suggest more than a cyclical adjustment: they mark the outlines of a developmental inflection point, where investor confidence is gradually restored and Nigeria positions itself, two years on, at the threshold of structural renewal and long- term transformation,” Cardoso said.
“But this is only the beginning. The real task is to ensure that these hard-won gains translate into durable prosperity, especially for the next generation. And this is where leadership becomes critical,” he added.
Over the past two years, the CBN has undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency.
This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines—the confidence to plan and invest in the future. To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets.
In the foreign exchange market, the apex bank faced a backlog of over $7 billion in unfulfilled commitments and a fragmented FX regime characterized by multiple forex rates, which had encouraged arbitrage opportunities. This regime stifled much needed foreign investment, and led to the depletion of our external reserves which fell to $33.22bn in December 2023.
It must also be understood that the cost of the FX subsidy regime is estimated to far exceed that of fuel subsidies. In 2022 alone, the potential revenue lost due to a less flexible FX regime was approximately N6.2 trillion, compared to N4.5 trillion from fuel subsidies. These funds could have significantly contributed to critical investments in education, healthcare, and infrastructure development.
While the Central Bank will continue to lay the foundation for price stability and foster a conducive policy environment, the role of our banks in this journey is crucial.
An FX market defined solely by when and how the Central Bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigeria’s. Now is the time for banks to step up to their intermediation and market-making responsibilities, providing customers with the right solutions to run their businesses and manage risks effectively.
.Nwadike, a financial analyst, writes from Abuja
