Global: IMF Flags Economic Uncertainty in Nigeria Despite Reform Momentum

The International Monetary Fund (IMF) has expressed concern over Nigeria’s economic outlook, highlighting significant macroeconomic uncertainty despite recent progress through fiscal and monetary reforms. This assessment follows the conclusion of the IMF’s 2025 Article IV Consultation with Nigeria, led by Mission Chief Axel Schimmelpfennig.

In its final report, the IMF acknowledged that Nigeria’s authorities have initiated critical reforms aimed at restoring economic stability, enhancing resilience, and setting a foundation for sustainable growth. These reforms include the cessation of Central Bank financing for fiscal deficits, the removal of fuel subsidies, and improvements in the functionality of the foreign exchange market.

However, the IMF cautioned that while the reforms have improved Nigeria’s capacity to withstand external shocks, the broader macroeconomic environment remains fragile. Factors such as elevated global risk sentiment, declining oil prices, and persistent domestic vulnerabilities continue to pose challenges for policy implementation and financial stability.

“The outlook is marked by significant uncertainty. Although important gains have been made since 2023, poverty and food insecurity remain high, and the benefits of reforms have yet to reach all Nigerians,” the IMF stated.

To mitigate emerging risks and strengthen the country’s fiscal and monetary resilience, the IMF urged Nigerian policymakers to adopt a data-driven, rule-based monetary policy framework aimed at reducing inflation, ensuring effective fiscal discipline, and fostering an environment conducive to private sector-led growth.

In line with these recommendations, the IMF emphasized the importance of maintaining a tight monetary policy stance, underpinned by clear communication on disinflation targets to anchor inflation expectations. It also advised that fiscal savings from fuel subsidy removal be redirected towards budgetary support for social protection and growth-enhancing investments.

“Safeguarding priority spending, including the expansion of targeted cash transfer programs under the World Bank-supported initiative, will be essential to alleviate food insecurity and support vulnerable populations,” the report added.

The IMF also endorsed Nigeria’s commitment to a neutral fiscal stance in the 2025 budget, which it said would complement the Central Bank’s efforts to reduce inflation and support broader regulatory compliance and governance improvements.

As part of its review, the IMF engaged with a broad spectrum of stakeholders including the Minister of Finance and Coordinating Minister of the Economy, Wale Edun; Minister of Agriculture and Food Security, Abubakar Kyari; Central Bank Governor Yemi Cardoso; and representatives from civil society, academia, and the private sector.

The consultation underscored the need for Nigeria to deepen reforms that promote regulatory transparency, enhance risk mitigation strategies, and improve the delivery of compliance-driven policy outcomes. With global uncertainties weighing on emerging markets, robust regulatory frameworks and sustainable compliance analytics will be critical to navigating the evolving financial landscape.