By Abiodun Folarin
WorldStage– The Executive Board of the International Monetary Fund(IMF), has commended Nigeria’s economic reforms over the past three years, saying they have strengthened macroeconomic stability and resilience, while projecting economic growth of 4.1 per cent in 2026 despite persistent poverty, food insecurity and renewed inflationary pressures arising from rising global fuel and food prices.
The IMF noted that although the reforms have delivered improved macroeconomic outcomes, conditions remain difficult for many Nigerians. According to the Fund, poverty reached 63 per cent based on the national poverty line, while an estimated 27 million Nigerians faced food insecurity in late 2025.
The Fund stated that higher global fuel, food and fertilizer prices are expected to boost Nigeria’s exports and fiscal revenues, but could also intensify inflationary pressures, worsening poverty and food insecurity. Economic growth is estimated at 4.0 per cent in 2025 and is projected to rise slightly to 4.1 per cent in 2026, although higher food and transportation costs are expected to weigh on economic activity.
After declining for more than a year, inflation rose to 15.4 per cent year-on-year in March 2026 as increases in international fuel and food prices began to affect the domestic economy. While these external price shocks are expected to push inflation higher in the short term, the IMF projects that the disinflation trend will resume in the second half of the year.
The Fund also reported that Nigeria’s gross international reserves increased to $46 billion in 2025 from $40 billion at the end of 2024. The improvement was supported by the current account surplus, net purchases of Central Bank open market operations by non-residents and a Eurobond issuance. Net international reserves also rose significantly to $35 billion at the end of 2025 from $23 billion a year earlier.
According to the IMF, the overall fiscal deficit of the consolidated government widened to an estimated 4.4 per cent of GDP in 2025. While non-oil revenues met expectations, oil revenues fell below budget targets. The shortfall was partly offset by lower-than-planned capital expenditure execution, while some capital spending undertaken outside the budget framework has since been incorporated through repeal and reenactment legislation.
The IMF warned that risks to the outlook remain elevated due to uncertainties in the global environment, particularly developments in fuel and food prices. It also identified Nigeria’s domestic security challenges as a significant risk to economic activity and livelihoods. However, it noted that stronger revenue mobilization could create additional fiscal space for priority investments and growth-enhancing expenditure.
In its assessment, the IMF Executive Directors endorsed the staff appraisal and praised the Nigerian authorities for reforms that have strengthened macroeconomic stability and resilience. However, they cautioned that poverty and food insecurity could worsen under current global conditions and stressed that tight macroeconomic policies and sustained reforms would be essential to preserving stability and promoting inclusive growth.
The Directors called for a neutral fiscal stance in 2026 to support macroeconomic stability and continued disinflation while safeguarding priority and social spending. They welcomed Nigeria’s recent tax reforms and suggested that additional tax policy measures may be required over the medium term, including measures to support an expanded cash transfer programme for vulnerable households.
Expressing concern over off-budget spending and complex financing arrangements, the Directors urged the authorities to accelerate reforms aimed at strengthening the budget process, public financial management, fiscal reporting, transparency and accountability.
The Board also commended the authorities’ efforts in reducing inflation but noted renewed inflationary pressures from external factors. Directors agreed that the Central Bank of Nigeria(CBN), should maintain a tight and data-dependent monetary policy stance until disinflation becomes firmly established and inflation expectations are anchored. They also welcomed progress toward adopting an inflation-targeting framework and encouraged measures to strengthen monetary policy transmission and communication.
On the foreign exchange market, the Directors welcomed the authorities’ commitment to a flexible exchange rate regime, while acknowledging that foreign exchange interventions may play a complementary role under specific circumstances. They also called for a gradual reduction in reliance on portfolio inflows with rollover risks and urged the phasing out of remaining exchange restrictions, capital flow management measures and multiple currency practices as conditions allow.
The IMF further noted that Nigeria’s financial system remains resilient, supported by the recent recapitalisation of banks. However, it advised continued vigilance regarding rising non-performing loans and the sovereign-bank nexus. Directors encouraged accelerated implementation of Basel III standards, including the countercyclical capital buffer and liquidity coverage ratio.
They also stressed the need to strengthen financial sector supervision and bring stablecoin and other crypto-asset activities within the regulatory framework. The Directors welcomed Nigeria’s removal from the Financial Action Task Force grey list and noted that sustained implementation of anti-money laundering and financial integrity measures would be critical to preserving recent gains.
The Board emphasized the importance of reforms aimed at promoting inclusive growth and economic diversification, identifying governance, security, electricity, agriculture, infrastructure and human capital development as key priorities. Directors also called for stronger macroeconomic statistics to support policy formulation and implementation, while some highlighted the need to integrate climate considerations into macroeconomic and development policies.
