IMF Calls on Nigeria to Deepen Inclusive Growth and Enforce Fiscal Discipline Amid Economic Strains

The International Monetary Fund (IMF) has advised Nigeria to prioritise inclusive economic growth, reinforce fiscal discipline, and increase domestic revenue mobilisation as central strategies to stabilise the economy and reduce poverty. In a blog post authored by Axel Schimmelpfennig, IMF Mission Chief to Nigeria, and Christian Ebeke, IMF’s Resident Representative, the Fund acknowledged recent reforms while cautioning that persistent challenges like inflation and food insecurity still pose serious threats to economic progress.

The IMF stressed the urgency for Nigeria to accelerate inclusive growth to lift millions out of poverty. While progress will take time, expanding cash transfer programmes could offer immediate relief to vulnerable citizens. The Fund noted that inclusive growth must be complemented by structural reforms and strategic social investments to ensure no group is left behind.

In terms of fiscal management, the IMF urged Nigeria to establish a more credible and transparent budget framework. It recommended that the government adopt realistic revenue and expenditure targets, improve public financial management, and ensure accountability through transparent reporting. A well-executed fiscal policy would strengthen public trust and ensure efficient allocation of limited resources to high-impact sectors.

Revenue generation also remains a critical focus. With substantial funding needs in agriculture, infrastructure, and climate adaptation, the IMF backed the Nigerian government’s ongoing tax reforms, which aim to improve compliance and ease tax payments. The Fund emphasized that once inflation eases and the cash transfer system becomes fully functional, there will be room to align tax rates with those of regional peers.

Despite some positive momentum, Nigeria continues to face major obstacles. Inflation still exceeds 20%, infrastructure remains weak—especially the power sector—and there is a lack of a robust social safety net to protect the most vulnerable. Additionally, global uncertainties and dependence on volatile oil revenues (which comprised 30% of government income in 2024) make the economy susceptible to shocks. The IMF concluded that Nigeria’s potential is undeniable, but its realisation hinges on sustained reforms and targeted investments in human development.

Source: Arise