The International Monetary Fund, an international financial institution and major financial and economic agency of the United Nations, has predicted that Nigeria’s inflation rate may rise to 44% if the Central Bank of Nigeria does not tighten it’s monetary policy.

In addition to this, the IMF also warns of a possible 35% depreciation of the naira in 2024. This was revealed in a recent assessment report by the organisation.

READ ALSO: Garri Blended With Onion Leaves: A Sokoto IDP’s Subsistence Diet

The report read: “An adverse scenario of an inflation-depreciation spiral combined with a climate shock would increase risks or Nigeria’s capacity to repay the fund. Staff presented a downside scenario to the authorities with the following features:

“Monetary policy is tightened insufficiently to bring down inflation below 20%, and pressures on the naira persist. In addition,  Nigeria is hit by another adverse climate shock in early 2024 (following severe flooding in late 2022) that exacerbates the current weakness in agriculture and leads to a decline in output and a surge in food prices.

“Given the absence of local production and the recent liberalization of commodity imports, the exchange rate would likely depreciate further—by an estimated 35% in 2024—and contribute to a further sharp rise in inflation, peaking at 44%, before monetary policy is eventually tightened sharply.”

Nigeria’s inflation rate hit 29.9% in January 2024 – the highest in more than two decades -– from 29.82% in the previous month. This has caused unprecedented hardships for Nigerians, and there have been protests over the rising costs of essentials in Nigerian states, including Oyo and Niger.

The assessment report also depicts a picture that is more dire than Nigeria’s actual situation for the remainder of 2024 if elements like appropriate monetary measures intended to revive the nation’s economy are not put into practice.

The IMF warns that if the naira continues to experience grave pressures without the government addressing the key issues that threaten the stability of the country’s economy, prices of goods and services will soar, thereby causing the situation to get uglier than it already is.