Abuja: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Nigeria, marking a significant milestone in the ongoing economic dialogue between the two entities.
According to African Press Organization, the Nigerian authorities have implemented major reforms over the past two years aimed at improving macroeconomic stability and enhancing resilience. Key measures included the removal of costly fuel subsidies, cessation of monetary financing of the fiscal deficit, and improvements in the functioning of the foreign exchange market. These reforms have bolstered investor confidence, enabling Nigeria to successfully access the Eurobond market and resume portfolio inflows. However, challenges remain as poverty and food insecurity have risen, prompting the government to focus on growth.
Nigeria’s growth accelerated to 3.4 percent in 2024, spurred primarily by increased hydrocarbon output and a vibrant services sector. However, agriculture remained subdued due to security challenges and declining productivity. In 2025, real GDP is expected to grow by 3.4 percent, supported by a new domestic refinery, higher oil production, and robust services. Despite a complex external environment, medium-term growth is projected to remain around 3.5 percent, driven by domestic reform gains.
The IMF noted increased downside risks amid global uncertainties. A decline in oil prices or a rise in financing costs could negatively impact growth, fiscal and external positions, and exacerbate exchange rate pressures. Security deterioration could further impact growth and food security.
Executive Board members commended the successful implementation of significant reforms, noting gains in macroeconomic stability and resilience. Yet, they emphasized the need for agile policymaking to safeguard and enhance stability, create conditions to boost growth, and reduce poverty. Directors concurred that the Central Bank of Nigeria’s tight monetary policy should continue until disinflation is entrenched. They welcomed the discontinuation of deficit monetization and efforts to strengthen central bank governance as a foundation for inflation targeting.
The Board praised steps to build reserves and support market confidence, including foreign exchange market reforms that enhance price discovery and liquidity. They advocated for a robust foreign exchange intervention framework to manage volatility, stressing the exchange rate as a crucial shock absorber. Directors also supported phasing out capital flow management measures in a timely manner.
Fiscal policies should maintain a neutral stance to stabilize the economy, prioritizing growth-enhancing investments. Accelerating cash transfers to assist the poor and advancing the tax reform bill were lauded as steps towards revenue mobilization and creating fiscal space. Directors acknowledged efforts to strengthen the banking system, including raising banks’ minimum capital, and promoting financial inclusion and capital market development.
To improve Nigeria’s growth outlook and reduce fragility, addressing security, red tape, and infrastructure gaps, including electricity supply, is essential. Improving health and education spending, enhancing agricultural productivity, and making the economy more resilient to climate events were also highlighted. Directors underscored the importance of removing barriers to private credit extension to support growth and welcomed the IMF’s capacity development to support reform efforts. Enhancing data quality was deemed critical for informed policymaking.