- The Financial Reporting Council of Nigeria (FRC) declared that Nigeria is not a hyperinflationary economy for the 2024 financial year
- FRC conducted extensive consultations with stakeholders and evaluated economic indicators to determine the country’s financial status
The Financial Reporting Council of Nigeria (FRC) has reaffirmed that Nigeria is not yet classified as a hyperinflationary economy.
In a statement issued on Wednesday and signed by its Executive Secretary and Chief Executive Officer, Dr. Rabiu Olowo, the Council declared that International Accounting Standard (IAS) 29, which addresses financial reporting in hyperinflationary economies, will not apply to financial statements for the 2024 fiscal year.
Dr. Olowo emphasized, “Determining hyperinflation requires careful judgment and consideration of all relevant indicators. After thorough analysis, the FRC concludes that Nigeria is not a hyperinflationary economy.
Therefore, IAS 29 should not be applied for the 2024 financial year. The Council will continue to monitor economic developments and update this position as necessary.”
The FRC, established by the Financial Reporting Council of Nigeria Act 2011, oversees the enforcement of financial reporting, auditing, valuation, actuarial, and corporate governance standards in both public and private sectors.
The Council stated that it conducted extensive consultations with key stakeholders, including professional accounting bodies, external auditors, regulatory agencies, and significant public interest entities. These consultations involved an objective evaluation of the five economic indicators outlined in IAS 29.
IAS 29 provides guidelines for financial reporting in hyperinflationary economies but does not define specific thresholds for hyperinflation.
Instead, it identifies indicators such as a population’s preference for non-monetary assets, pricing in stable foreign currencies, and inflation-adjusted credit sales. A key criterion is a cumulative inflation rate nearing or exceeding 100% over three years.
The FRC noted that its analysis of these indicators for Nigeria revealed continued confidence in the local currency. “Data shows Nigerians predominantly transact in Naira and invest in Naira-denominated assets.
There is no widespread preference for holding wealth in non-monetary assets or stable foreign currencies,” the statement read.
The Council also highlighted data from the Central Bank of Nigeria (CBN) and financial institutions, showing increased investment in monetary assets like treasury bills, mutual funds, and fixed deposits over the last three years.
Additionally, the statement noted that the Central Bank of Nigeria has consistently raised the monetary policy rate as part of efforts to manage inflation, further reinforcing the nation’s economic stability.
The FRC pledged to maintain vigilance on economic trends and engage stakeholders regularly to ensure accurate and reliable financial reporting in line with global standards.
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