Abuja: The International Monetary Fund (IMF) Executive Board has completed the Article IV Consultation with Nigeria, marking a significant milestone in the country’s economic reform journey. Over the past two years, Nigeria has implemented major reforms aimed at improving macroeconomic stability and enhancing resilience. These reforms include the removal of costly fuel subsidies, the cessation of monetary financing of the fiscal deficit, and improvements in the functioning of the foreign exchange market. As a result, investor confidence has strengthened, allowing Nigeria to successfully access the Eurobond market and see a resumption of portfolio inflows. However, challenges such as rising poverty and food insecurity remain, prompting the government to focus on raising growth.
According to International Monetary Fund, growth in Nigeria accelerated to 3.4 percent in 2024, largely driven by increased hydrocarbon output and a vibrant services sector. Despite these advancements, agriculture remained subdued due to security challenges and declining productivity. The real GDP is projected to continue expanding by 3.4 percent in 2025, supported by a new domestic refinery, higher oil production, and robust services. In the face of a complex and uncertain external environment, medium-term growth is expected to hover around 3.5 percent, bolstered by domestic reform gains.
The IMF highlights that downside risks have increased amid heightened global uncertainty. Factors such as a potential further decline in oil prices or an increase in financing costs could adversely affect growth, fiscal and external positions, financial stability, and exchange rate pressures. Additionally, a deterioration in security conditions could negatively impact growth and exacerbate food insecurity.
The IMF Executive Board commended Nigeria’s authorities for the successful implementation of significant reforms and the associated gains in macroeconomic stability and resilience. Despite these achievements, the Board emphasized the importance of agile policymaking to safeguard and enhance macroeconomic stability, create enabling conditions to boost growth, and reduce poverty. The Central Bank of Nigeria’s tight monetary policy stance was deemed appropriate, with suggestions to continue until disinflation becomes entrenched.
The Executive Directors also welcomed the discontinuation of deficit monetization and ongoing efforts to strengthen central bank governance. They praised reforms in the foreign exchange market that supported price discovery and liquidity, and advocated for the implementation of a robust foreign exchange intervention framework. The Directors stressed the importance of a neutral fiscal stance to safeguard macroeconomic stabilization, while prioritizing investments that enhance growth and accelerating cash transfers to assist the poor.
Moreover, the IMF recognized actions to strengthen Nigeria’s banking system, including increasing banks’ minimum capital, boosting financial inclusion, and promoting capital market development. The Directors emphasized the importance of moving towards robust risk-based supervision for mortgage and consumer lending schemes, as well as in the fintech and crypto sectors. The progress made in strengthening the AML/CFT framework was welcomed, with stress on resolving remaining weaknesses to exit the FATF grey list.
To enhance Nigeria’s growth outlook, improve food security, and reduce fragility, the IMF highlighted the importance of addressing issues related to security, bureaucratic red tape, agricultural productivity, infrastructure gaps, electricity supply, health and education spending, and climate resilience. Addressing structural impediments to private credit extension is also seen as crucial to support growth. The IMF’s capacity development initiatives to support Nigeria’s reform efforts and the critical need for enhancing data quality for sound, data-driven policymaking were also emphasized.