The International Monetary Fund has called for comprehensive revenue mobilization and budgetary reforms to unlock Nigeria’s economic potential, despite acknowledging positive momentum from recent policy adjustments.
In its latest assessment, the Washington-based institution highlighted that while reforms including fuel subsidy removal and foreign exchange liberalization have improved investor confidence and strengthened reserves, structural challenges continue constraining growth prospects.
The Fund emphasized that Nigeria’s real per capita GDP declined between 2014 and 2023, with poverty affecting 42 percent of the population. Current inflation levels above 20 percent, combined with inadequate power supply, continue hampering business operations and economic expansion.
“Making growth more inclusive requires scaling up existing cash transfer systems,” the IMF stated, noting that debt servicing consumes a disproportionate share of government revenues, limiting infrastructure and social investments.
The organization praised recent tax reforms aimed at broadening the tax base and improving compliance mechanisms. However, it stressed that additional efforts are needed to align tax rates with regional standards while ensuring sustainable revenue generation.
Oil revenues still account for approximately 30 percent of public finances, making Nigeria vulnerable to global price fluctuations. The IMF urged diversification of revenue sources to reduce dependence on hydrocarbon exports and create more stable fiscal foundations.
The Fund recommended implementing more effective budget frameworks with realistic assumptions, enhanced spending controls, and transparent reporting mechanisms. These measures would improve resource allocation efficiency and ensure priority sectors receive adequate funding.
Recent economic reforms, particularly subsidy removal and exchange rate liberalization, have created both opportunities and challenges. While these policies improved foreign exchange access and restored investor confidence, they also contributed to increased living costs and social pressures.
The IMF’s assessment comes as Nigeria continues implementing comprehensive economic reforms aimed at addressing structural imbalances. Success in these efforts could position the country for sustained growth and improved living standards for its population.
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