The World Bank has expressed concerns that the Central Bank of Nigeria’s monetary policy tightening may not effectively control inflation.
In its Global Economic Prospects report released on
Wednesday, the institution noted that one of the significant risks to Nigeria’s
economic growth is the failure of these tightening policies to rein in
inflation.
“Risks to Nigeria’s growth outlook are substantial,
including the possibility that the tightening of monetary policy stops short of
reining in inflation,” the World Bank stated.
Despite the CBN’s aggressive interest rate hikes, inflation
remains a significant challenge for the country.
The monetary policy rate has increased by 750 basis points
since February, reaching 26.25 per cent in May.
However, the World Bank warns that this may not be enough to
address the issue.
The report predicts that Nigeria’s economic growth will
remain modest, at 3.3 per cent this year and 3.5 per cent in 2025.
The non-oil economy is expected to experience sustained
growth, while the oil sector is expected to stabilize as production recovers.
The World Bank also highlights the issue of public debt in
sub-Saharan Africa, which is expected to remain elevated over the forecast
period.
It noted that “If global interest rates remain high,
debt-service costs for countries in the region may rise, increasing the risk of
government debt distress.”