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Loss of central bank independence could lead to instability, IMF warns, projects global growth at 3.0% in 2025

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4 months ago

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International Monetary Fund on Tuesday has projected global growth at 3.0 per cent in 2025 and 3.1 per cent in 2026, as significant policy shifts continue to unfold worldwide. This projection is contained in the IMF’s latest World Economic Outlook (WEO) Update for July 2025, titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty,” released on Tuesday. The forecast for 2025 is 0.2 percentage points higher than that in the reference forecast of the April 2025 WEO and 0.1 percentage points higher for 2026. The report said for sub-Saharan Africa,  growth was expected to remain stable at 4.0 in 2025, as predicted in the April forecast, before increasing to 4.3 per cent in 2026. For Nigeria, growth is projected at 3.4 per cent in 2025 and 3.2 per cent in 2026. In the Middle East and Central Asia, growth was projected to increase to 3.4 per cent in 2025 and 3.5 per cent in 2026, while for Latin America and the Caribbean, growth was projected to slow to 2.2 per cent in 2025 and recover to 2.4 per cent in 2026.
According to the IMF, this reflects stronger-than-expected front-loading due to anticipated higher tariffs and lower average effective U.S. tariff rates compared to those announced in April. The projection also reflected an improvement in financial conditions, partly because of a weaker U.S. dollar and fiscal expansion in several major jurisdictions. It said global headline inflation was projected to decrease to 4.2 per cent in 2025 and 3.6 per cent in 2026, following a path similar to the forecasts projected in April. However, the overall outlook hides significant differences among countries,  with forecasts predicting  that inflation will remain above target levels in the United States, while it is expected to be more subdued in other large economies. The report said among advanced economies, growth was projected to be 1.5 per cent in 2025 and 1.6 per cent in 2026, like in the U.S., projected growth was expected to rise to 1.9 per cent in 2025 and 2.0  per cent in 2026. This is a pace that is 0.1 percentage point higher relative to the projection in the April  2025 reference forecast, with some offset from private sector demand cooling faster than expected and weaker immigration. 
It said in the Euro area, growth was expected to increase to 1.0 per cent in 2025 and 1.2 per cent in 2026, while in other advanced economies, growth was projected to decrease to 1.6 per cent in 2025 and pick up to 2.1 per cent in 2026. For emerging markets and developing economies, growth was expected to increase to 4.1 per cent in 2025 and slightly drop to 4.0 per cent in 2026. It noted, “Compared to the forecast in April 2025, China’s growth is reversed upwards by 0.8 percentage points to 4.8 per cent due to stronger-than-expected activity in the first half of 2025 and a significant reduction in U.S.-China tariffs.”
It warned that any loss of central bank independence could undermine efforts to keep inflation expectations in check, potentially triggering a wave of financial, monetary and macroeconomic instability. The IMF hammered home that message in an update to its World Economic Outlook, released Tuesday, and in a separate interview with IMF chief economist Pierre-Olivier Gourinchas. In the update, the IMF said the current economic climate of prolonged trade tensions and uncertainty over evolving tariffs heightened the need for robust policies to safeguard financial stability and ensure central bank independence. In some cases, if tariff shocks resulted in disruptive movements in foreign exchange and risk premiums, it said it might be suitable for countries to implement temporary foreign exchange interventions or capital flow management measures. “Crucially, the ambiguous and volatile landscape also requires clear and consistent messaging from central banks and the protection of central bank independence, not only in legal terms, but also in practice,” the global lender said.
U.S. President Donald Trump has repeatedly exhorted the U.S. Federal Reserve to cut interest rates while questioning the leadership and continued tenure of Chair Jerome Powell, whose term at the Fed’s helm is due to end in May 2026. Those statements have unsettled markets, worried about a loss of the longstanding principle of Fed independence. The two men sparred over cost overruns on a Fed renovation project on Friday, as Trump repeated his call for lower rates. Asked about Trump’s efforts to push Powell out of office, Gourinchas underscored the importance of maintaining central bank independence to keep inflation expectations anchored. “This is really a core plank for macroeconomic stability overall. That’s one of the hard learned lessons of the last 40 years,” the IMF chief economist told Reuters in an interview, without mentioning the Fed specifically. We have a very, very clear message on this – it’s very important to keep central bank independence and to implement it,” he said. Central bank independence was foundational to macroeconomic frameworks in both advanced and emerging economies, he said. Despite the recent era of large price increases from 2021 to 2024, markets and consumers maintained confidence in policymakers’ determination to keep inflation in check over the medium term, averting a broad de-anchoring of inflation expectations.
“They think that someone is at the helm, someone is in the driving seat and is going to implement monetary policy to achieve price stability,” he said. “That’s the credibility.” Should that credibility become called into question or threatened, the link from inflation to inflation expectations would become “much more brittle,” he said.
Inflation could rise again suddenly due to myriad shocks, and if people did not trust central banks to do their jobs, inflation expectations would start rising, triggering wage increases, which would beget higher prices, higher interest rates and ultimately a need to “crash the economy.” “So now you have macroeconomic instability. You have monetary instability and you have financial instability,” he said, underscoring the need to ensure consumers and financial markets were certain that central banks would act on their own.

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Economy

Nigeria champions African-Arab trade to boost agribusiness, industrial growth

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2 days ago

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December 5, 2025

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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.

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Economy

FEC approves 2026–2028 MTEF, projects N34.33trn revenue 

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2 days ago

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December 4, 2025

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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.

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Economy

CBN hikes interest on treasury Bills above inflation rate

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2 days ago

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December 4, 2025

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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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