The International Monetary Fund (IMF) has urged the Nigerian government to act more boldly on economic reforms, warning that high inflation, deep poverty, and failing infrastructure are holding the country back.
In a country-focused article titled “How Nigeria Can Unleash Its Economic Potential,” released on Monday, July 7, the IMF acknowledged that some steps have been taken under President Bola Tinubu, but said much more needs to be done to stabilise the economy and protect struggling citizens.
According to the Fund, inflation remains dangerously high, still above 20%, and is hurting everyday Nigerians.
“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 IMF stated.
Beyond inflation, the IMF pointed to chronic issues like unreliable electricity supply and a lack of safety nets for vulnerable citizens. It noted that these gaps continue to push more Nigerians into hardship and limit the nation’s ability to grow.
To turn things around, the Fund stressed the need for better budget planning and stronger government transparency.
“As an essential ingredient for economic development, Nigeria needs an effective budget framework,” it said. “Delivering effective investments in people and infrastructure requires realistic budget assumptions, strong expenditure management, and transparent implementation and reporting.”
The IMF also flagged concerns about how little of Nigeria’s revenue is left for investments in public services once debt interest payments are made.
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It said savings from fuel subsidy removal must be channelled into priority spending. “It is critical that the substantial financial savings from the removal of fuel subsidies flow to the government to fund priority spending,” it said.
On taxes, the Fund said reforms should continue, but added that more people need to be brought into the system. Once inflation eases and cash transfer programmes are in place, it said, the government could align tax rates with regional norms.
Meanwhile, the Central Bank of Nigeria was advised to maintain its focus on fighting inflation. “For its part, monetary policy should continue to decisively tackle inflation and reduce economic uncertainty,” the article noted.
The IMF concluded by calling for higher domestic revenue to fund key sectors like agriculture, infrastructure, and climate adaptation.
It backed ongoing tax reforms aimed at simplifying the system and boosting compliance.
“The government’s tax reforms will make it easier to pay taxes and ensure that everyone who owes taxes pays them,” it said.
In all, the message from the IMF is clear: if Nigeria wants real progress, it must tackle inflation head-on, improve how it spends its money, and ensure reforms truly reach those who need them most.