The Financial Reporting Council of Nigeria (FRC) has clarified that Nigeria is not yet considered a hyperinflationary economy, thereby confirming that the International Accounting Standard (IAS) 29 on financial reporting for hyperinflationary economies should not be applied to the preparation of financial statements for the 2024 financial year. This statement was made by the FRC’s Executive Secretary/CEO, Dr. Rabiu Olowo, following thorough analysis of Nigeria’s economic indicators.
According to Dr. Olowo, hyperinflation is determined by assessing several key indicators, including the preference for non-monetary assets, inflation-adjusted credit sales, and cumulative inflation exceeding 100% over a three-year period. After engaging with various stakeholders such as professional accounting bodies, auditors, government agencies, and public interest entities, the FRC concluded that these conditions do not apply to Nigeria at this time.
The FRC noted that Nigerians continue to transact primarily in Naira and invest in Naira-denominated assets, reflecting confidence in the local currency. Additionally, despite ongoing inflation, there has been consistent investment in monetary assets, such as treasury bills and fixed deposits, indicating economic activity that does not align with characteristics of a hyperinflationary environment.
The Central Bank of Nigeria (CBN) has also raised interest rates to help curb inflation, further indicating active efforts to stabilize the economy.
The FRC will continue to monitor the situation and update its stance if necessary, ensuring that financial reporting standards are in line with the country’s economic reality.
