IMF to CBN: Suspend deadline for cash swap to ease hardship

The International Monetary Fund (IMF) has tasked the Central Bank of Nigeria (CBN) to extend the February 10 deadline on the old naira notes.

The IMF’s counsel coincided with the ruling of the Supreme Court which temporarily suspended the implementation of the deadline for the swap of old naira notes for new notes.

IMF’s representative, Laraba Bonet, in a statement issued on Wednesday, February 8, 2023, stated that the implementation of the cash swap policy has caused hardship and disruptions to commerce.

“In light of hardships caused by disruptions to trade and payments due to the shortage of new banknotes available to the public, despite measures introduced by the CBN to mitigate the challenges in the banknote swap process; the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline,” Bonet said.

In another development, the IMF has urged decisive and effective monetary policy tightening to avoid a de-anchoring of inflation expectations in Nigeria.

The Executive Board of IMF in a statement issued on Wednesday after the conclusion of its Article IV consultation with Nigeria, noted the recent increases in the policy rate.

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The IMF Directors encouraged the CBN to stand ready to further increase the policy rate if needed, and to implement additional actions, including fully sterilizing central bank financing of fiscal deficits and phasing out credit intervention programmes.

“Strengthening the CBN’s independence and establishing price stability as its primary objective is critical,” they said.

Directors also urged the authorities to finalize securitization of the CBN’s existing stock of overdrafts and emphasized that the CBN’s budget financing should strictly adhere to the statutory limits.

Directors encouraged a continued move toward a unified and market-clearing exchange rate by dismantling various exchange rate windows at the CBN.

“Providing clarity on exchange rate policy would help boost investor confidence, quell capital outflow pressures, and rebuild buffers,” the IMF said.

The Star