IMF Urges Nigeria to Consider Extending Banknote Swap Deadline

The International Monetary Fund said on Wednesday that Nigeria should consider extending a deadline to swap old banknotes because of the disruption to trade and payments being caused by a shortage of new notes.

Nigerians have to turn in 1,000-, 500- and 200-naira notes by Friday, when they cease to be legal tender.

The Central Bank of Nigeria, CBN, has started releasing newly designed notes, but many Nigerians say they are not yet available in banks, sparking acute cash shortages and chaotic scenes at banks.

Ari Aisen, IMF resident representative in Nigeria, said in a statement: “In spite of 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.”

The CBN has said recalling the banknotes is part of plans to reduce the use of cash and curb double-digit inflation. About 1.3 trillion naira ($2.8 billion) in old notes has been deposited into the bank since the announcement in October, according to the bank.

Some politicians have queried the CBN’s timing for the swap, ahead of elections this month, where campaigns are funded mostly by cash.

Some ruling party officials have publicly accused the CBN of a plot to turn voters against its presidential candidate in the Feb. 25 election, in which President Muhammadu Buhari is not running as he will have already served two terms.

Opposition presidential candidate Atiku Abubakar has said extending the deadline would help by “reducing the financial consequences for citizens”.

Three states on Monday asked the country’s highest court to stop the federal government and central bank from ending the use of old naira notes this week, saying this was causing hardship ahead of the election.