The Financial Reporting Council (FRC) has said Nigeria is not yet a hyperinflationary economy due to the positive economic outlook that has strengthened the Council’s earlier position.
The Council in an addendum to its earlier position on the financial reporting in hyperinflationary economies released on the January 22, 2025 said sequel to the release of the World Economic Outlook Report by the IMF on April 22, 2025 and the rebasing of the Economy in January 2025 by National Bureau of Statistics (NBS) that has impacted the GDP and Inflation Rate, the FRC has again engaged various stakeholders such as the External Auditors, Government Regulatory Agencies etc., where an objective evaluation of the five indicators of the economic environment of a country as stipulated in IAS 29: Financial Reporting in Hyperinflationary Economies were undertaken.
The council in the statement signed by its Executive Secretary/CEO, Dr Rabiu Olowo, said though IAS 29 outlines the accounting requirements for entities in hyperinflationary economies, it does not specify when hyperinflation arises or is deemed to arise but rather outlines several indicators of hyperinflation.
These it said includes a preference for non-monetary assets, pricing in stable foreign currencies, credit sales adjusting for inflation, and a cumulative inflation rate approaching or exceeding 100 per cent over a three (3) year period.
“From our assessment, Nigerians continue to transact in local currency, as stated in the January 2025 press release, investment in local currency continues to grow,” it said.
It explained that in February 2025, 670 billion treasury bills issued were over subscribed to 3.1 trillion. In April 2025, the FGN Saving Bond issued by the DMO in two types: 2-Year and 3-Year tenors had 1.135 trillion and 3.2 trillion subscriptions, respectively.
“This shows that Nigerians continue to transact in local currency and invest in Naira-denominated assets, indicating confidence in the local currency.”
Another consideration, it said, that supports the case that Nigeria is not a hyperinflationary economy is that salaries and wages for labour are paid in Naira,” FRC said, adding that goods and services are quoted in Naira as well. “Nothing has changed compared to the previous position of the Council, as monetary amounts are predominantly regarded in terms of the Nigerian Naira by the general population and not in terms of any other foreign currency.
“As stated in the earlier release on January 22, 2025, determining hyperinflation requires significant judgment and consideration of all relevant indicators.
“Based on our judgment we can conclude that Nigeria is not yet a hyperinflationary economy due to the positive economic outlook that has strengthened the Council’s earlier position.”
