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Nigeria: Government not interested in ‘tone deaf’ IMF over devaluation

By David Whitehouse
Posted on Thursday, 11 February 2021 15:56

naira
A trader changes dollars with naira at a currency exchange store in Lagos, Nigeria, February 12, 2015. REUTERS/Joe Penney/File Photo

Nigeria is likely to allow further devaluation of the naira this year even as it tells the IMF there’s no need for it.

The IMF held discussions with the government and central bank before publishing a report this week in which it argues that the naira is overvalued by 18% and needs to be devalued.

The Nigerian authorities disagreed, telling the IMF that a lower naira would stoke inflation.

Nigerian inflation at 15.75% in December was at its highest rate in three years, driven by higher food prices.

There’s an element of the IMF being “tone deaf” in making public devaluation recommendations in that context, says Nkemdilim Nwadialor, a financial analyst at Chapel Denham Hill in Lagos. That made it easy for the authorities to reject what was “not the most helpful” advice, she says.