The International Monetary Fund (IMF) has released its latest country review for Nigeria, urging Africa’s largest economy to deepen fiscal discipline, strengthen revenue generation, and sustain robust monetary measures as part of a comprehensive strategy to deliver sustainable growth.
In its 2025 Article IV Consultation published on Monday, the Fund noted that while Nigeria has made notable strides in stabilising its macroeconomic fundamentals, persistent structural challenges continue to limit the economy’s full potential.
The IMF highlighted elevated inflation, low tax-to-GDP ratios, foreign exchange pressures, and underperforming public revenues as core risks that must be addressed through coordinated policy reforms.
Tackling Inflation and FX Pressures
Headline inflation remains in double digits, driven by food price volatility, currency depreciation, and structural bottlenecks in the supply chain. The Fund commended recent monetary tightening by the Central Bank of Nigeria (CBN) but called for consistent policy actions to anchor inflation expectations and stabilise the naira.
“Strengthening the monetary policy framework and enhancing central bank independence will be essential to build market confidence and manage inflation sustainably,” the IMF said.
Raising Domestic Revenue
The IMF reiterated its longstanding position that Nigeria must aggressively expand its domestic revenue base through improved tax compliance, elimination of inefficient fuel subsidies, and broader reforms to strengthen public finance management.
Nigeria’s tax-to-GDP ratio, estimated at around 6% in 2024, remains one of the lowest in sub-Saharan Africa, limiting the government’s capacity to fund critical infrastructure and social programmes.
Prioritising Social Protection
To cushion vulnerable groups from ongoing macroeconomic adjustments, the IMF advised the federal government to scale up targeted cash-transfer programmes and direct spending towards education, healthcare, and other social investments.
“Expanding well-targeted social safety nets will help mitigate the impact of necessary reforms on the most vulnerable segments of society,” the report stated.
Unlocking Private Investment
The Fund also underscored the importance of improving the business climate and removing structural barriers that hinder private sector-led growth, including challenges around power supply, policy consistency, and access to affordable credit.
It urged policymakers to advance energy sector reforms, enhance transparency in the oil and gas industry, and attract new capital inflows to diversify the economy beyond oil dependence.
Outlook Remains Cautiously Optimistic
Despite headwinds, the IMF projects moderate GDP growth of about 3.2% for 2025, supported by recovering oil output, improved FX liquidity, and an expected pick-up in non-oil sectors such as agriculture, telecoms, and services.
However, the Fund cautioned that realising stronger medium-term growth will depend on the government’s resolve to deliver policy continuity, rebuild fiscal buffers, and ensure that reforms translate into inclusive economic outcomes.
Nigeria’s fiscal authorities have welcomed the IMF’s recommendations, noting that the country remains committed to broad-based reforms that can deliver sustainable development and improve living standards.
