The IMF verdict on Nigeria’s economy

Despite some economic reforms initiated by the Bola Tinubu administration in recent times, the International Monetary Fund (IMF) has predicted that tougher days are ahead for Nigerians. It also projects Nigeria’s debt-to-GDP to reach a new high of 33.1 per cent in 2027 as a result of fresh loans taken by the federal government from multilateral institutions. It stood at 32.3 per cent as of the fourth quarter (Q4) 2025. Some reports, however, have indicated higher figures closer to 52 per cent in 2027. This is below the global threshold of 60 per cent, just as over 20 million Nigerians face food insecurity. Rising transport costs are expected to worsen the cost-of-living crisis in the country. 

IMF’s fresh concerns over Nigeria’s economy are contained in its latest assessment report unveiled at IMF-World Bank meetings in Washington DC, USA. The report reveals that Nigeria’s economy “is entering a more fragile phase,” as global shocks from the on-going tension in the Middle East, particularly from energy markets and supply chains, are eroding whatever gains government may have made from implementing its economic policies.

Consequently, the IMF has downgraded Nigeria’s Economic Growth forecast for 2026 to 4.1 per cent. It stated that the decision reflects the “balance of pressures” shaping Nigeria’s economy. These pressures include persistent strain on the non-oil sectors, which remain vulnerable to imported inflation and structural bottlenecks. Besides, the global financial institution noted that while the present spike in oil price may have offered support for Nigeria’s economy, the gains are increasingly being wiped out by rising domestic costs and weakening of non-oil activity.

The observations made by the IMF can hardly be faulted. While global oil prices have risen above $100 per barrel due to the US/Israel-Iran conflict, the cost of petroleum products in Nigeria has reached unprecedented level and transportation costs have equally being elevated beyond the reach of many Nigerians. Headline inflation resurgence of 15.38 per cent released by the National Bureau of Statistics (NBS) for the month of March endangers business sustainability, consumer purchasing power and overall economic competitiveness. The development has also halted the recent disinflation trend. It raises fresh concerns about the sustainability of near-end price stability in the country. 

 The IMF’s verdict on Nigeria’s economy should serve as a wake-up call for the government. As the global financial powerhouse rightly stated, Nigeria’s problem is hinged on financial indiscipline. It also comes amid renewed calls by the federal government to the multilateral institutions for key reforms in the global financial landscape. Minister of Finance and Coordinating Minister for the Economy, Wale Edun, who made the call in Washington at the IMF meeting, warned that high borrowing costs and rising debt servicing obligations are severely constraining the ability of developing countries like Nigeria to fund growth and deliver sustainable development. Surprisingly, Edun said Nigeria would not approach the IMF to borrow from its $50billion facility, which the Fund announced last week to support struggling economies in Africa. As of April 2026, the federal government has secured approval for new external loans totalling $6billion. The World Bank holds a major portion of Nigeria’s external debt, totalling $15billion, with significant borrowing also from the IMF and China’s Exim Bank. The cost of servicing foreign debt has risen significantly, with reports indicating billions of dollars spent in 2025 and early 2026, putting pressure on foreign exchange reserves. Currently, Nigeria’s debt stock stands at over N159trillion. The elevated borrowings and cost of debt servicing are almost exceeding acceptable thresholds. It is weighing heavily on government’s ability to transform the economy and ‘renew hope’ for Nigerians, with poverty reaching new heights.

Undoubtedly, Nigeria faces structural vulnerability and external shocks. Worse still, government has not been prudent and transparent in managing revenues generated and borrowings from global lenders. IMF warning should be heeded. Government should make concerted effort to reform the economy through seamless policy implementation. It should go beyond slogans. Policies must have positive impact on the living standards of the citizens. Recently, the Country Director of the World Bank, Mr Lire Ersado, disclosed that poverty reduction effort in Nigeria has failed to yield the expected results despite huge investment by successive administrations. Factors affecting the fight against multidimensional poverty in Nigeria include lack of coordination by various agencies entrusted with its implementation. This is an indictment on those implementing the poverty alleviation programmes. Those sabotaging the poverty alleviation efforts have not been adequately sanctioned. Statistics from the Humanitarian Affairs and Poverty Reduction Office, as well as data from the National Bureau of Statistics (NBS), showed that between 2015 and early 2025, N3.5trillion was spent on poverty alleviation programmes, with the National Social Investment Programmes (NSIP) as the flagship initiative.

The billions of dollars said to have been saved as a result of subsidy removal have not trickled down to the poor and vulnerable in the society. Also, galloping inflation has erased the purchasing power of many Nigerians, with the poor being the hardest hit. We call for more transparency and efficiency in implementing the poverty reduction programmes. The Federal Government should heed the IMF/World Bank advice.