Dipo Olowookere
By Dipo Olowookere
The International Monetary Fund (IMF) has projected that Nigeria’s inflation rate is likely to retreat to 15.5 per cent in the second half of 2021.
On Tuesday, the National Bureau of Statistics (NBS) released a report showing that inflation moderated to 17.92 per cent year-on-year in May from 18.12 per cent in April.
In a statement issued on Thursday, the global lender said its forecast of a deceleration in inflation in the period is purely based on the removal of border controls by the federal government and the elimination of base effects from elevated food price levels.
Business Post reports that on August 20, 2019, the federal government announced the sudden closure of the country’s land borders in order to tackle the smuggling of food items, drugs and arms.
This affected the prices of food in the market and caused supply shortages, leading to high inflation in the country. The borders were reopened last December.
From June 1 to 8, 2021, a team of IMF led by Ms Jesmin Rahman held talks with the Nigerian authorities to discuss recent economic, financial developments and outlook.
After discussions, Ms Rahman said, “Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 per cent, following the removal of border controls and the elimination of base effects from elevated food price levels.”
According to her, the decline in inflation last month is welcomed, pointing out that with the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated.
She praised the efforts of the fiscal and monetary authorities to jumpstart the economy, noting that “the incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 per cent in 2021.”
In addition, she said the measures put in place by the government to contain the transmission of COVID-19 in Nigeria were commendable, noting that the IMF strongly supports “efforts to acquire additional doses from countries with surplus stocks.”
