Naira Redesign: What IMF told Nigeria as it tries to tackle inflation

The International Monetary Fund (IMF) has asked the Central Bank of Nigeria (CBN) to apply caution in its bid to redesign the naira to curb inflation. 

This was disclosed on Friday by IMF’s resident representative in Nigeria Ari Aisen, during an interview with Bloomberg. 

Recall that the CBN said it was redesigning the naira notes to curb excess currency circulation and inflation, among other things. Data from the apex bank shows that N2.73 trillion out of the N3.23 trillion currency in circulation is outside the vaults of commercial banks across the country.

What IMF said:

Ari Aisen advised the CBN to be cautious to avoid any missteps that could undermine confidence in the financial system. They also noted that the IMF has reached out to the CBN for assistance. According to him, “we stand ready to provide any assistance as needed.” 

CBN’s Governor Godwin Emefiele earlier stated that the proposed redesign of some naira notes would improve the value of the currency and rein in inflation. He said:

• “As of September 2022, we had N3.23 trillion naira in circulation; out of that, N2.73 trillion is outside the vaults of the banks.
• “So, first of all, we want to mop all the N3.23 trillion back into the CBN so we can retake control of the money supply and see how this will help rein in inflation. No doubt we believe it has a positive impact on inflation.”

Meanwhile, the naira suffered a historic plunge to N775/$ two days after the Central Bank of Nigeria (CBN) announced it was redesigning the 200, 500, and 1,000 naira notes. 

Nigeria’s minister of finance revealed that she was not consulted before the new central bank’s policy to change the N200, N500 and N1,000 notes was announced.