The Financial Reporting Council of Nigeria (FRC) has said that Nigeria’s economy cannot be classified as hyperinflationary, despite rising inflation and concerns raised by the International Monetary Fund (IMF) and the National Bureau of Statistics (NBS).
In a statement released on Thursday, the FRC, led by Executive Secretary and Chief Executive Officer Rabiu Olowo, stated that Nigeria does not meet the conditions under the International Accounting Standard 29 (IAS 29), which guides how financial reports should be prepared in hyperinflationary economies.
IAS 29 sets five main signs to determine whether a country is experiencing hyperinflation. These include: the public preferring to use non-monetary assets instead of cash, transactions being carried out in stable foreign currencies, pricing of goods and services on credit terms that reflect future inflation, wages and prices being linked to price indices, and a three-year cumulative inflation rate above 100 percent.
According to the FRC, only one of these indicators currently applies to Nigeria the cumulative inflation rate. Nigeria’s three-year cumulative inflation now stands at 107.02 percent, just crossing the threshold set by IAS 29. However, the council stressed that all other indicators do not apply to Nigeria’s economic environment.
The council explained that many Nigerians still carry out transactions in naira and continue to invest heavily in local currency instruments. It pointed to the oversubscription of Treasury Bills and Federal Government of Nigeria (FGN) savings bonds, which have continued to attract trillions of naira from investors as proof that the local currency remains in active use and trusted by the public.
“Goods and services in Nigeria are still mainly priced in naira,” the statement read. “There is no widespread shift to foreign currencies for everyday transactions, nor are wages or interest rates formally linked to any specific inflation index.”
It also clarified that credit transactions in Nigeria are still based on traditional risk factors, not inflation-adjusted pricing. “There is no evidence to support the premise that the price of credit transactions is adjusted for inflation,” the Council said. “Business entities continue to offer credit terms based on contractual agreements, risk appetite, and customer profiles.”
As a result, the council concluded that IAS 29 should not be applied in the preparation of 2025 financial statements in Nigeria. This decision will be critical for accountants and financial professionals preparing annual reports for firms operating within the country.
The council also made reference to other government policy decisions, such as the reversal of the rule that forced Dangote Refinery to buy crude oil in naira instead of dollars. It said that this change has helped stabilise petroleum product prices in the country and could reduce some of the inflationary pressure.
FRC boss Rabiu Olowo assured that the Council will continue to monitor economic conditions closely and provide updates if Nigeria’s inflationary status changes. He noted that while inflation remains a challenge, the full conditions required to declare a hyperinflationary economy under global standards have not yet been met.
Financial and economic analysts believe the FRC’s position will bring some relief to Nigerian companies worried about the complicated financial reporting demands that would come with a hyperinflation label. However, they also warned that inflation must be addressed through more targeted policy actions to avoid long-term economic damage.
