The International Monetary Fund (IMF) has commended Nigeria’s economic reforms, saying measures implemented over the past three years have strengthened macroeconomic stability and improved resilience.
In a statement issued on Tuesday in Washington, DC, the IMF said Nigeria’s “strong reforms over the past three years have yielded improved macroeconomic outcomes and built resilience”.
The Fund reported that Nigeria’s gross international reserves rose to 46 billion dollars in 2025, up from 40 billion dollars at the end of 2024.
According to the IMF, the improvement was supported by a current account surplus, non-resident purchases of Central Bank open market instruments, and a successful Eurobond issuance.
The institution also disclosed that net international reserves increased significantly to 35 billion dollars at the end of 2025 from 23 billion dollars a year earlier.
In spite of the positive indicators, the IMF cautioned that economic conditions remained difficult for many Nigerians, particularly low-income households.
It noted that poverty reached 63 per cent under the national poverty line, while an estimated 27 million Nigerians experienced food insecurity during the latter part of 2025.
The Fund warned that higher global fuel, food and fertiliser prices could support export earnings and government revenues but would also intensify inflationary pressures.
It said such pressures could worsen poverty levels and deepen food insecurity across vulnerable communities.
The IMF estimated Nigeria’s economic growth at four per cent in 2025 and projected a modest increase to 4.1 per cent in 2026.
It explained that higher food and transportation costs would continue to weigh on economic activity despite ongoing reforms.
According to the Fund, inflation rose to 15.4 per cent year-on-year in March 2026 after declining for more than a year.
The increase was attributed largely to rising international fuel and food prices, which began filtering into domestic markets.
“After being on a declining trend for over a year, inflation nudged up to 15.4 per cent year-on-year in March 2026 as the jump in international fuel and food prices started hitting Nigeria,” it stated.
However, the IMF maintained that inflation was expected to resume its downward trajectory during the second half of the year.
It added that although external price shocks would push inflation higher in the short term, the broader disinflation trend remained intact.
On fiscal performance, the IMF estimated that Nigeria’s consolidated government deficit increased to 4.4 per cent of Gross Domestic Product in 2025.
The organisation noted that while non-oil revenues met expectations, oil revenues fell below budget projections.
“While non-oil revenues were on target, oil revenues fell short of budget expectations,” the Fund stated.
According to the IMF, the revenue shortfall was offset partly by under-execution of reported capital expenditure programmes.
It welcomed the inclusion of additional capital spending previously undertaken outside the budget framework through recent repeal and re-enactment legislation.
The IMF identified risks to Nigeria’s economic outlook, particularly uncertainty surrounding global fuel and food prices.
It also highlighted domestic security challenges as a major threat to economic activity and citizens’ welfare.
“Risks to the outlook come from the uncertain global environment, in particular the outlook for fuel and food prices.
“The domestic security situation is another risk to people and economic activity,” the Fund stated.
The IMF said stronger revenue mobilisation could create additional fiscal space for investments that support economic growth and development.
It nevertheless stressed that poverty and food insecurity could worsen if external economic pressures persist.
“Tight macroeconomic policies and continued reforms supported by technical assistance from the Fund and other partners will be crucial to preserve stability and boost inclusive growth,” it said.
The Fund recommended maintaining a neutral fiscal stance in 2026 to reinforce macroeconomic stability and support the ongoing disinflation process.
It urged authorities to continue protecting priority expenditures and social spending programmes despite fiscal pressures.
The IMF welcomed recent tax reforms but suggested additional tax policy measures may be required over the medium term.
It said such measures could help finance an expanded cash transfer programme aimed at supporting vulnerable Nigerians.
The institution also raised concerns about off-budget spending practices and complex financing arrangements.
It called for accelerated reforms to strengthen budgeting processes, fiscal reporting systems and risk management frameworks.
The Fund further advocated improved transparency, accountability and public financial management standards across government institutions.
On monetary policy, the IMF commended Nigerian authorities for reducing inflation while acknowledging renewed external price pressures.
It agreed that the Central Bank of Nigeria should maintain a tight monetary policy stance guided by incoming economic data.
The Fund said such an approach should remain in place until inflation is firmly contained and expectations become anchored.
It also welcomed progress towards adopting an inflation-targeting framework and encouraged stronger monetary policy communication.
The IMF praised Nigeria’s commitment to a flexible exchange rate regime and recognised that foreign exchange interventions could play a supportive role when necessary.
It urged authorities to reduce dependence on short-term portfolio inflows that carry rollover risks.
The institution also encouraged the gradual removal of remaining exchange restrictions, capital flow management measures and multiple currency practices when conditions allow.
The IMF noted that Nigeria’s financial system remained resilient, supported by the ongoing recapitalisation of banks.
However, it advised regulators to remain vigilant regarding rising non-performing loans and links between banks and sovereign debt exposure.
The Fund encouraged faster implementation of Basel III standards, including countercyclical capital buffers and liquidity coverage requirements.
It also stressed the need to strengthen financial supervision and bring stablecoin and other crypto-asset activities within regulatory oversight.
The IMF welcomed Nigeria’s removal from the Financial Action Task Force grey list and said sustained reforms would be necessary to preserve gains in financial integrity.
The organisation reiterated the importance of structural reforms to promote inclusive growth and economic diversification.
It identified governance, security, electricity, agriculture, infrastructure and human capital development as critical priority areas.
The IMF also called for stronger macroeconomic statistics to improve policy formulation, implementation and monitoring. NAN