The Financial Reporting Council (FRC) of Nigeria has clarified that the country has not yet reached a hyperinflationary economic state.
Consequently, the International Accounting Standard (IAS) 29, which governs financial reporting in hyperinflationary economies, is deemed unnecessary for the preparation of Nigeria’s 2024 financial statements.
In a statement issued by Dr. Rabiu Olowo, Executive Secretary/CEO of the FRC, the Council emphasized that implementing IAS 29 requires significant judgment based on a thorough assessment of economic indicators.
“After evaluating these indicators, we conclude that Nigeria is not a hyperinflationary economy,” Olowo stated. “IAS 29 should not apply for the preparation of financial statements for the 2024 financial year.”
Economic Indicators and Stakeholder Engagement
Dr. Olowo explained that the Council worked closely with various stakeholders, including professional accounting bodies, external auditors, regulatory agencies, and major public interest entities, to assess the relevance of IAS 29 in Nigeria.
The evaluation focused on five key indicators of economic health outlined in the IAS 29 standard.
Contrary to what defines a hyperinflationary economy, the FRC noted that Nigerians continue to trust the local currency.
“Data shows that the population largely transacts in Naira and invests in Naira-denominated assets, reflecting confidence in the local currency,” the statement revealed.
The Council cited evidence such as:
Rising Investments in Monetary Assets: Reports from the Central Bank of Nigeria and financial institutions indicate increased investments in treasury bills, mutual funds, fixed deposits, and other short-term monetary assets over the past three years.
Growth in Pension Assets: As of November 2024, Nigeria’s pension assets, primarily held in monetary forms, stood at ₦22.25 trillion—up from ₦18.35 trillion in December 2023.
Sustained Currency Acceptance: The Naira remains the primary medium of exchange, with no signs of rejection as a base currency for transactions.
The FRC assured Nigerians that it would continue to monitor economic trends and revise its stance if necessary.
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