Abuja: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Nigeria. Over the past two years, Nigerian authorities have enacted significant reforms to enhance macroeconomic stability and resilience. These reforms include the removal of costly fuel subsidies, cessation of monetary financing of the fiscal deficit, and improvements in the foreign exchange market’s functioning. As a result, investor confidence has risen, enabling Nigeria to successfully tap the Eurobond market and resume portfolio inflows. However, challenges such as rising poverty and food insecurity persist, prompting the government to focus on boosting growth.
According to African Press Organization, Nigeria’s growth accelerated to 3.4 percent in 2024, primarily driven by increased hydrocarbon output and a vibrant services sector. The agriculture sector, however, remained subdued due to security challenges and declining productivity. Real GDP is projected to grow by 3.4 percent in 2025, supported by a new domestic refinery, higher oil production, and robust services. Despite a complex external environment, medium-term growth is expected to remain steady at around 3½ percent, buoyed by domestic reform gains.
The report highlights increased downside risks due to global uncertainty, warning that a decline in oil prices or rising financing costs could negatively impact growth, fiscal and external positions, financial stability, and exchange rate pressures. Security deterioration could also affect growth and food security.
The IMF Executive Board’s assessment commended Nigeria’s successful implementation of significant reforms, which have contributed to macroeconomic stability and resilience. However, they noted that these gains have not yet benefited all Nigerians and emphasized the need for agile policymaking to safeguard and enhance stability, boost growth, and reduce poverty.
The Central Bank of Nigeria’s tight monetary policy stance was deemed appropriate by Directors, who recommended its continuation until disinflation is entrenched. They welcomed the end of deficit monetization and efforts to strengthen central bank governance for inflation targeting. Directors praised measures to build reserves and support market confidence, as well as reforms to the foreign exchange market. They highlighted the importance of a robust foreign exchange intervention framework to contain excess volatility and emphasized the exchange rate’s role as a shock absorber.
A neutral fiscal stance was recommended to safeguard macroeconomic stability, prioritizing investments that enhance growth. Directors also urged the acceleration of cash transfers to aid the poor and commended progress on the tax reform bill aimed at enhancing revenue mobilization and creating fiscal space for development spending while preserving debt sustainability.
Directors recognized efforts to strengthen the banking system, including the process of increasing banks’ minimum capital. They also welcomed efforts to boost financial inclusion and promote capital market development, stressing the need for robust risk-based supervision for mortgage and consumer lending, as well as the fintech and crypto sectors. Progress in strengthening the AML/CFT framework was noted, with Directors stressing the importance of resolving remaining weaknesses to exit the FATF grey list.
To improve Nigeria’s growth outlook, food security, and reduce fragility, Directors emphasized addressing security issues, bureaucratic hurdles, agricultural productivity, infrastructure gaps, including electricity supply improvements, and enhancing health and education spending. Addressing structural impediments to private credit extension was also deemed necessary to support growth. Directors supported the IMF’s capacity development efforts to aid Nigeria’s reform initiatives and stressed the importance of enhancing data quality for sound, data-driven policymaking.