Economy
IMF Executive Board approves new policy coordination instrument
Executive Board of the International Monetary Fund (IMF) has approved the establishment of a new non-financing Policy Coordination Instrument (PCI) to further strengthen the Global Financial Safety Net (GFSN) and enhance the effectiveness of the Fund’s toolkit. The decision follows a series of discussions by the Executive Board on the adequacy of the GFSN.
Before now the IMF had based its coordination on Policy Support Instrument PSI in which member countries were monitored based on IMF financing. The new instrument is designed to help countries unlock financing from official and private donors and creditors, as well as demonstrate a commitment to a reform agenda.
It will enable a policy dialogue between the Fund and countries, monitoring of economic developments and policies, as well as Board endorsement of those policies. The key design features draw on Fund financing arrangements and the Policy Support Instrument (PSI), with some differences. These include no eligibility criteria, it is open to the full membership, a more flexible review schedule, and a review-based approach for monitoring of conditionality.
The IMF said that the Executive Directors approved the proposal to establish the Policy Coordination Instrument (PCI), as part of the Fund’s broader effort to strengthen the global financial safety net (GFSN). They generally agreed that a new non‑financial instrument, designed for countries seeking to unlock financing from multiple sources and/or to demonstrate a commitment to a reform agenda, could enhance the effectiveness of the Fund’s toolkit, promote a more efficient allocation of global resources, and help improve coordination with regional financing arrangements and across different layers of the GFSN.
It said that “Directors broadly endorsed the objective of the PCI and, with a few caveats, supported its key design features. They agreed that the PCI should aim to help countries design and implement a full‑fledged macroeconomic program to prevent crises and build buffers, enhance macroeconomic stability, or address macroeconomic imbalances. Directors generally concurred that policies supported under the PCI should meet the standard required under an upper credit tranche (UCT) financial arrangement with the Fund. They also agreed that the PCI should be available to all member countries except those that need Fund financial support at the time of PCI approval or those with overdue obligations to the General Resources Account and the Poverty Reduction and Growth Trust (PRGT)”.
According to the IMF “Directors supported the proposed modalities of the new instrument. They generally agreed that a review‑based approach to monitoring program conditionality could help alleviate stigma and streamline the review process while preserving the UCT standard and the Executive Board’s judgment regarding its decision to complete a review. Directors stressed the need to ensure that the elimination of the requirement for a waiver of non‑observance in cases where program quantitative targets were not met does not weaken the positive signalling effect of the PCI and undermine the UCT standard.
Directors thus underscored that the completion of a program review under the PCI would require a Board assessment that any deviation from a quantitative or reform target was either minor or temporary, or that sufficient corrective action had been taken to achieve the objectives of the program. They recognised that the review‑based approach proposed for the PCI would not have implications for Fund financial arrangements, as this issue had been thoroughly discussed and settled for financial arrangements in 2009.”
It also said “Directors welcomed the flexibility built into the PCI design. Specifically, they supported a more flexible review schedule, with a short buffer period for authorities to implement overdue policies, take corrective actions, or mobilize necessary financing to close the financing gap. Directors appreciated that, beyond the buffer period, staff would provide an interim performance update for information to the Board. They called for careful communication in cases where non‑completion of a review for a twelve‑month period results in an automatic termination of the PCI.
Directors noted that an on‑track PCI could facilitate access to Fund resources should the member experience a balance of payments need. While the concurrent use of the PCI and Fund financing under certain instruments would be possible, a few Directors saw a case for cancelling the PCI when a member requests Fund financing, noting conceptual and operational issues with such concurrent use. A number of Directors stressed that access to financing from other GFSN sources would need to respect the mandate and decision‑making process of each institution, prompting a need for staff to engage with those prospective financing institutions.
At the same time, Directors emphasised the importance of upholding the Fund’s independence and reputation. They supported applying the publication regime and misreporting framework similar to those for the PSI, which they considered important to strengthen the signaling effect of the instrument and to safeguard the integrity of Fund assessments under the PCI. Directors recognized the positive signaling effect of the PSI for PRGT‑eligible countries. They noted, however, that the advent of the PCI could potentially give rise to overlaps between the PCI and the PSI, and for this reason, a few Directors would prefer eliminating the latter to maintain a streamlined toolkit. Directors broadly agreed to retain the PSI, pending a comprehensive assessment in the context of the review of facilities for low‑income countries in 2018.
Directors noted that the PCI is a form of technical assistance and, as such, charging for the PCI will follow the relevant technical assistance policy. They supported reviewing the instrument after the approval of ten PCI‑supported programs or after five years from the adoption of the PCI, whichever is triggered first, or earlier if warranted, given uncertainty about the potential demand for the instrument and resource implications.
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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