Nigeria must maintain tight monetary and fiscal policies while advancing structural reforms to safeguard recent macroeconomic gains, the International Monetary Fund (IMF) has said, warning that poverty and food insecurity remain elevated despite progress in stabilising the economy.
In its 2026 Article IV consultation conclusion released on Monday, the IMF said reforms introduced over the past three years had strengthened macroeconomic stability and improved resilience, but conditions for many Nigerians remain difficult.
It estimated that 63 percent of Nigerians live below the national poverty line, while about 27 million people experienced food insecurity in late 2025, underscoring the scale of economic hardship in Africa’s most populous country.
“Strong reforms over the past three years have yielded improved macroeconomic outcomes and built resilience. Still, conditions for many Nigerians remain difficult,” the Fund said.
The IMF said higher global prices for fuel, food and fertiliser are expected to boost export earnings and government revenues, but warned they are also likely to intensify inflationary pressures and deepen hardship for vulnerable households.
Nigeria’s economy is projected to grow by 4.0 percent in 2025 and 4.1 percent in 2026, though the Fund said rising transport and food costs could weigh on economic activity in the near term.
Inflation, which had been on a declining trend for over a year, rose to 15.4 percent year-on-year in March 2026 as global price pressures began to feed through to domestic markets.
The IMF said while inflationary pressures from external shocks may persist in the short term, the disinflation trend is expected to resume in the second half of the year.
Nigeria’s external position showed improvement in 2025, with gross international reserves rising to $46 billion from $40 billion a year earlier, supported by current account surpluses and capital inflows including a Eurobond issuance.
Net international reserves also increased significantly over the same period, reflecting stronger external buffers.
On fiscal performance, the IMF estimated that Nigeria’s overall deficit widened to 4.4 percent of GDP in 2025, driven by weaker-than-expected oil revenues despite stable non-oil revenue collection.
The Fund noted that some capital spending occurred outside the formal budget framework, raising concerns about fiscal transparency and expenditure control.
It warned that global uncertainty, particularly around commodity prices, and domestic security challenges remain key risks to the outlook.
In its Executive Board assessment, IMF directors commended Nigeria’s reform progress but stressed that further policy tightening is needed to consolidate gains and support inclusive growth.
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They recommended a neutral fiscal stance in 2026, coupled with stronger social spending to protect vulnerable groups from rising living costs.
Directors also welcomed recent tax reforms but said additional measures may be required to strengthen revenue mobilisation over the medium term, particularly to finance expanded social protection programmes.
On monetary policy, the IMF said the Central Bank of Nigeria should maintain a tight, data-dependent stance until inflation is firmly on a downward path and expectations are anchored.
It also encouraged continued progress toward inflation targeting and improved monetary policy communication.
The Fund reiterated support for Nigeria’s flexible exchange rate regime, while urging gradual removal of remaining exchange restrictions and currency management measures where conditions allow.
Nigeria’s banking sector was described as resilient following recent recapitalisation efforts, though the IMF cautioned about rising non-performing loans and risks linked to sovereign exposure.
Directors also urged stronger supervision of financial institutions and accelerated implementation of Basel III standards, including liquidity and capital buffers.
The IMF further highlighted the importance of reforms in electricity, infrastructure, agriculture, security and governance to support diversification and long-term growth.
It also called for improved statistical systems and stronger integration of climate considerations into macroeconomic policymaking.
The IMF said its next Article IV consultation with Nigeria will take place in line with the standard 12-month cycle.
