The Financial Reporting Council of Nigeria (FRC) has stated that the current general prices level in the nation’s economy does not meet the criteria for classification as hyperinflationary, despite recent macroeconomic data from the International Monetary Fund and the National Bureau of Statistics, which reflect high inflationary pressures.
In a statement issued on Thursday, the FRC maintained that a comprehensive evaluation of Nigeria’s economic indicators aligned with the International Accounting Standard 29 (IAS 29) on Financial Reporting in Hyperinflationary Economies showed that only one of the five conditions has been met.
Specifically, the IAS 29 outlines specific indicators to determine hyperinflation, including a preference for non-monetary assets, use of stable foreign currencies for transactions, inflation-adjusted pricing on credit sales, linkages of wages and prices to price indices, and a cumulative inflation rate of over 100 per cent across three years.
The Executive Secretary and Chief Executive Officer of the FRC, Rabiu Olowo, disclosed in the statement that while Nigeria’s three-year cumulative inflation rate, now at 107.02%, had met the 100% threshold, other critical indicators of Nigeria did not align with the characteristics of a hyperinflationary economy.
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The Council stated: “For instance, Nigerians continue to transact and invest in naira-denominated assets. Treasury bills and FGN savings bonds have recorded oversubscriptions in trillions, reflecting sustained confidence in the local currency.”
This is even as it clarified that goods and services in Nigeria were still largely quoted and transacted in naira, while wages and interest rates are not indexed to any specific price index just as credit transactions in the country are not priced to account for future loss in purchasing power due to inflation.
According to the FRC, there is no evidence to support the premise that the price of credit transactions is adjusted for inflation as business entities continue to offer credit terms based on contractual agreements, risk appetite, and customer profiles.
Based on its findings, the council maintained that IAS 29 should not be applied in the preparation of 2025 financial statements in Nigeria, despite inflation pressures and the recent rebasing of economic data by the National Bureau of Statistics (NBS) as doing so could distort the results of such exercise.
Olowo assured the public that the FRC will continue to monitor economic developments and update its position when necessary as desirable for the nation’s economic growth.
