•Says Nigeria not yet hyperinflationary economy  

By Elizabeth Adegbesan  

The Financial Reporting Council of Nigeria, FRCN, has advised that the IAS 29: Financial Reporting in Hyperinflationary Economies should not be applied to prepare financial statements for the 2025 financial year.

According to FRC, the advice is based on its January 2025 position which sees the country’s economic outlook on a positive side hence not yet hyperinflationary.

The Council disclosed this in a statement signed by its Executive Secretary/Chief Executive Officer,   Dr. Rabiu Olowo.

FRC also noted that the statement serves as an addendum   to its earlier position on the IAS 29-Financial Reporting in Hyperinflationary Economies   in January, 2025 and sequel to the release of the World Economic Outlook Report by the IMF on 22nd April, 2025 and the rebasing of the Economy in January 2025 by National Bureau of Statistics (NBS).

“The FRC has again engaged various stakeholders such as the External Auditors, Government Regulatory Agencies etc., where an objective evaluation of the five indicators of the economic environment of a country as stipulated in IAS 29: Financial Reporting in Hyperinflationary Economies were undertaken especially to determine the relevance and applicability of the standard in Nigeria in light of the inflationary trend in the country.

“As stated in the earlier release on 22nd January, 2025, determining hyperinflation requires significant judgment and consideration of all relevant indicators.  

“The FRC concludes that Nigeria is not yet a hyperinflationary economy due to the positive economic outlook that has strengthened the Council’s earlier position.  

“Therefore, IAS 29 should not be applied in the preparation of financial statements for the 2025 financial year.”

The Council noted that IAS 29 outlines the accounting requirements for entities in hyperinflationary   economies and   does not specify when hyperinflation arises or is deemed to arise but rather outlines several indicators of hyperinflation that includes a preference for non-monetary assets, pricing in stable foreign currencies, credit sales adjusting for inflation, interest rates, wages, and prices linked to price index: and a cumulative inflation rate approaching or exceeding 100 percent over a three (3) year period.

FRC, after assessing the IAS 29 indicators of an hyperinflationary economy, concluded that Nigeria’s economy only met the last indicator which is a cumulative inflation rate approaching or exceeding 100 percent over a three (3) year period.

“The cumulative inflation rate over three years is approaching or exceeding 100 percent: There is a slight reduction in the 3-year cumulative inflation rate from  

110.9 percent to 107.02 percent, given the rebasing by the National Bureau of Statistics (NBS) and reflected in the IMF World Economic Outlook Data that takes  into account the rebased CPI. “Even though it exceeded the threshold specified in IAS 29, the marginal  reduction of 3.88 percent in the cumulative rate revealed easing of the inflation pressure in the economy.

“The FRC will continue to monitor economic developments and  

update this position when necessary”, it added.