The International Monetary Fund (IMF) has expressed concern over Nigeria’s persistently high inflation rate, warning that the country must intensify its economic reforms to unlock growth and reduce poverty.
In a country-specific article titled “How Nigeria Can Unleash Its Economic Potential,” released on Monday, the Fund commended some recent policy shifts under President Bola Tinubu’s administration but noted that critical challenges continue to hinder the economy’s full potential.
Despite efforts to stabilize the macroeconomic environment, the IMF pointed out that inflation remains stubbornly above 20 per cent — a trend that undermines purchasing power and deepens the country’s cost-of-living crisis.
The report cited weak infrastructure, especially unreliable electricity, as a major barrier to economic productivity. In addition, widespread poverty and food insecurity continue to affect millions of Nigerians, worsened by the lack of a comprehensive social safety net for the most vulnerable.
“The country needs stronger and more sustained growth to lift millions of people out of poverty and food insecurity, which is what the authorities are focusing on,” the report said.
To support long-term growth and stability, the IMF emphasized the need for an effective budget framework. It stressed that realistic budget assumptions, strong expenditure management, and transparent implementation and reporting are essential for delivering quality investments in human capital and public infrastructure.
The IMF advised that once Nigeria’s cash transfer system becomes fully operational and the current cost-of-living crisis is eased, tax rates should be adjusted to align with regional standards. However, it added that immediate attention must be paid to ensuring that financial savings from the removal of fuel subsidies are redirected into critical national investments.
“For now, the share of revenue that goes to interest spending leaves too little for investment in people and infrastructure,” the report stated. “It is, therefore, critical that the substantial financial savings from the removal of fuel subsidies flow to the government to fund priority spending.”
The Fund also called on the Central Bank of Nigeria (CBN) to maintain a firm and credible monetary policy to decisively combat inflation and reduce uncertainty in the financial system.
“Monetary policy should continue to decisively tackle inflation and reduce economic uncertainty,” it stated.
On fiscal strategy, the IMF recommended that Nigeria prioritize domestic revenue generation to meet its growing developmental needs, especially in sectors such as agriculture, infrastructure, electricity access, and climate adaptation.
“The government’s tax reforms will make it easier to pay taxes and ensure that everyone who owes taxes pays them,” it noted, adding that stronger revenue mobilization would help Nigeria achieve long-term fiscal sustainability and reduce reliance on debt.
Nigeria’s economy has experienced significant turbulence in recent years, grappling with rising inflation, currency volatility, and structural constraints. While the removal of fuel subsidies and the floating of the naira are seen as bold moves, experts say successful implementation and efficient resource allocation will determine the outcomes of the ongoing reforms
