The International Monetary Fund (IMF) has advised the Nigerian government to intensify its economic reform efforts, warning that current challenges such as high inflation, widespread poverty, and weak infrastructure continue to hinder growth despite ongoing policy shifts.
The IMF’s recommendations were contained in a country focus article released on Monday, titled “How Nigeria Can Unleash Its Economic Potential.” The global financial institution acknowledged the efforts of President Bola Tinubu’s administration but expressed concern that inflation remains stubbornly above 20 percent.
The Fund highlighted poor infrastructure, particularly the unreliable electricity supply, as a major obstacle to economic activity. It also noted that poverty and food insecurity remain widespread, exacerbated by the absence of a comprehensive social safety net to protect the most vulnerable citizens.
According to the IMF, “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.”
It emphasised the need for an effective budgetary framework.
“As an essential ingredient for economic development, Nigeria needs an effective budget framework. Delivering effective investments in people and infrastructure requires realistic budget assumptions, strong expenditure management, and transparent implementation and reporting—which, in turn, can strengthen accountability.”
On inflation, the IMF urged the Central Bank of Nigeria to maintain a firm stance: “For its part, monetary policy should continue to decisively tackle inflation and reduce economic uncertainty.”
To meet its development goals, the IMF called on Nigeria to boost domestic revenue generation.
“This is essential given Nigeria’s substantial funding needs in growth-enabling areas such as agriculture, infrastructure, including access to electricity, and climate adaptation. The government’s tax reforms will make it easier to pay taxes and ensure that everyone who owes taxes pays them.”
The Fund suggested that once the current cost-of-living crisis is eased and cash transfer systems become fully operational, tax rates could be realigned with regional benchmarks. In the meantime, it stressed that resources freed up from fuel subsidy removal must be efficiently channelled into priority investments.
“For now, the share of revenue that goes to interest spending leaves too little for investment in people and infrastructure. It is therefore critical that the substantial financial savings from the removal of fuel subsidies flow to the government to fund priority spending,” it stated.