Adebajo: Reforms sequencing & implementation highlights from IMF consultation

Amidst the ongoing economic challenges facing Nigeria, the recent IMF Article IV consultation has spotlighted the critical importance of steadfast, well-sequenced, and well-communicated reforms to restore macroeconomic stability, reduce poverty, support social cohesion, and pave the way for faster, inclusive, and resilient growth. Tilewa Adebajo, the Chief Executive Officer of CFG Advisory, emphasized the endorsement of the reform programs initiated by the Minister of Finance and the Coordinating Minister of the Economy during a recent interview on CNBC Africa. Adebajo highlighted the positive impact of these ongoing programs on the revenue side and fiscal improvements, as well as commended the Central Bank for its approach to inflation targeting. Adebajo pointed out that while the reform programs have garnered support, the key challenge lies in the sequencing and management of their implementation. He cited instances of false starts and policy U-turns, such as the recent cyber levy tax, which contradicted the Presidential Committee on Tax Reform's recommendations. Adebajo stressed the need for better synchronization between monetary and fiscal policies, emphasizing the importance of aligning investment and trade policies as well. Discussing the economic outlook, Adebajo expressed optimism about Nigeria's ability to tackle inflation and enhance its economic stability. He referenced historical data showing Nigeria's inflation rate as low as 9% and highlighted the significance of effective economic modeling. Adebajo suggested that a tight fiscal environment could help control inflation and drive currency appreciation. The conversation delved into the foreign exchange market dynamics, with Adebajo acknowledging the speculative nature of the market. He underscored the importance of tightening monetary policies to combat Naira depreciation and advocated for the improvement of FX market mechanisms. Additionally, Adebajo addressed the challenges associated with cash circulation outside formal banking systems and the need for financial inclusion strategies to tap into the informal sector's potential. As the discussion turned to the MPC meeting and upcoming inflation figures, Adebajo emphasized the importance of data-driven decision-making. He highlighted the need for consistent policy sequencing and alignment between monetary and fiscal policies to achieve desired economic outcomes. Adebajo also stressed the urgency of addressing structural challenges like insecurity and food scarcity to ensure sustainable economic recovery. In conclusion, Adebajo called for a holistic approach encompassing not just monetary and fiscal policies but also structural reforms to address systemic issues affecting Nigeria's economic landscape. He urged policymakers to prioritize security, investment, and trade policy realignment to bolster the country's economic resilience and pave the way for future growth.