Nigeria needs more flexibility in setting monetary policy so it can use its foreign currency reserves to support the poor population if low oil prices persist, said International Monetary Fund Managing Director Christine Lagarde.

“With a very clear ambition to support the poor people of Nigeria, there could be added flexibility in the monetary policy, particularly if, as we think, the price of oil is likely to be lower for longer,” Lagarde told reporters in the Nigerian capital of Abuja after a closed-door meeting with President Muhammadu Buhari and members of his cabinet.

International Monetary Fund Managing Director Christine Lagarde (C) is escorted by Nigeria's Finance Minister Kemi Adeosun (L) and Nigeria's Central Bank Governor Godwin Emefiele (R) upon arriving at the Nnamdi Azikiwe International Airport.
International Monetary Fund Managing Director Christine Lagarde (C) is escorted by Nigeria's Finance Minister Kemi Adeosun (L) and Nigeria's Central Bank Governor Godwin Emefiele (R) upon arriving at the Nnamdi Azikiwe International Airport.
Photographer Stephen Jaffe/IMF

Lagarde’s comments come a week after Buhari said he doesn’t personally support weakening the naira and would need to be convinced that devaluing the local currency of Africa’s largest oil producer is the best course to take for the economy.

The naira has been all but fixed at 197-199 per dollar since early March. The central bank has curbed foreign-exchange trading and introduced import controls after the naira fell to a record low as crude prices plunged. Oil accounts for 95 percent of Nigeria’s export earnings and 70 percent of government revenues.

“Clearly, the authorities should not deplete the reserves of the country simply because of rules that could be exceedingly rigid,” she said. “I’m not suggesting that rigidity be entirely removed, but some degree of flexibility will be helpful.”

Lagarde, who’s on the second day of a four-day trip to Nigeria and Cameroon, said she would be meeting with Central Bank of Nigeria Governor Godwin Emefiele.

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