IMF Warns Nigeria of Fiscal Strain as Global Tensions Threaten Oil Revenue

Nigeria is facing mounting fiscal pressure as the International Monetary Fund (IMF) warns that intensifying global trade tensions and tighter financial conditions could significantly reduce the country’s earnings from oil and gas exports. The warning came during the Spring Meetings of the IMF and World Bank, where officials pointed out that any sustained dip in global demand for commodities, particularly oil—could severely impact Nigeria’s already strained revenue streams. With over 70 percent of its export earnings tied to the oil sector, the country is especially vulnerable to geopolitical shocks.

At a separate forum held during the meetings in Washington, DC, Finance Minister Wale Edun affirmed Nigeria’s commitment to fiscal discipline amid declining revenues. He emphasized that the government would prioritize salary payments, pensions, debt obligations, and national security while cutting waste and aligning spending with actual income. Edun also revealed that a forensic audit of the Nigerian National Petroleum Company Limited (NNPCL) is ongoing, following controversy over a ₦2.7 trillion fuel subsidy refund claim that’s now under government review.

Despite recent economic reforms, including the liberalization of the exchange rate and tighter monetary policy, IMF officials noted that Nigeria remains exposed to external risks. Jason Wu of the IMF highlighted that while Nigeria’s GDP growth is stable and inflation is easing slightly, investor sentiment could reverse quickly due to global market volatility. He added that Nigeria’s sovereign credit spreads had improved earlier in the year but warned of potential reversals if financial markets deteriorate further.

The IMF projects Nigeria’s current account surplus to decline steadily, from 9.1% of GDP in 2024 to 5.2% by 2026, driven by falling oil prices, rising import costs, and limited capital inflows. Inflation, though temporarily moderated, is expected to climb, potentially hitting 37% in 2026. With inflation at 24.23% as of March 2025, the government faces the dual challenge of controlling prices while safeguarding vulnerable populations and maintaining investor confidence. The IMF reiterated its support for Nigeria’s economic reforms but urged continued vigilance to avoid slipping into debt distress.