From Victor Osula, Abuja
The Executive Board of the International Monetary Fund has concluded the 2025 Article IV Consultation with Nigeria, commending the country’s monetary and fiscal authorities for implementing far-reaching reforms over the past two years.
In a statement issued from Washington, D.C., on Wednesday, July 2, the IMF noted that the reforms have helped stabilise Nigeria’s macroeconomic environment, bolster resilience, and restore investor confidence.
The Fund said the Central Bank of Nigeria (CBN) was appropriately maintaining a tight monetary policy stance and urged the continuation of such measures until disinflation is firmly anchored. It welcomed the ongoing recapitalisation of banks and efforts to strengthen financial inclusion and deepen capital market participation.
Directors also encouraged the adoption of a robust risk-based supervisory framework for mortgage and consumer lending, as well as for the fintech and crypto sectors. The IMF applauded the authorities’ work to improve the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework and emphasised the need to address remaining gaps to exit the Financial Action Task Force (FATF) grey list promptly.
On the monetary side, the IMF praised the end of deficit monetisation and steps toward strengthening central bank governance as critical for establishing an institutional framework for inflation targeting.
The report noted that the CBN’s reforms in the foreign exchange market have enhanced price discovery and liquidity. It called for the development of a strong FX intervention framework to manage excessive volatility, describing the exchange rate as a vital shock absorber.
“The Nigerian authorities have implemented major reforms over the past two years, improving macroeconomic stability and enhancing resilience. They have removed costly fuel subsidies, halted monetary financing of deficits, and improved the functioning of the FX market,” the report said.
As a result, investor confidence has returned, enabling Nigeria to tap the Eurobond market and attract renewed portfolio inflows. The IMF said GDP growth accelerated to 3.4% in 2024, driven largely by increased oil production and a vibrant services sector. However, it noted that agriculture remained subdued due to security challenges and declining productivity.
The Fund projects that Nigeria’s real GDP will grow by 3.4% in 2025, supported by increased domestic refining capacity, higher oil output, and sustained growth in services. Medium-term growth is expected to average around 3%, underpinned by ongoing structural reforms.
The IMF also observed that gross and net international reserves rose in 2024, driven by a strong current account surplus and improved portfolio inflows. Reforms in the FX market helped stabilise the naira, while improvements in food production contributed to lowering inflation to 23.7% in April 2025, down from an average of 31% in 2024, based on the back-casted rebased CPI index from the National Bureau of Statistics.
Inflation is projected to continue declining in the medium term, supported by tight macroeconomic policies and an anticipated reduction in retail fuel prices.
On the fiscal front, the IMF noted an improvement in 2024, driven by exchange rate-related revenue gains, improved revenue administration, and higher grants, which offset rising interest and overhead costs.
However, it warned that downside risks have grown amid global uncertainty. A drop in oil prices or rising financing costs could negatively impact growth, fiscal performance, and external stability. Insecurity also remains a major threat to growth and food supply.
While acknowledging that the benefits of reforms have yet to reach all Nigerians, the IMF urged agile policymaking to protect macroeconomic gains, reduce poverty, and boost inclusive growth. It also recommended the gradual removal of capital flow management measures in a properly sequenced manner.
The report called for a neutral fiscal stance that prioritises growth-enhancing investments and faster implementation of social safety nets, including cash transfers to vulnerable groups.
The IMF Directors further praised the progress on tax reform, describing it as a key step toward improved revenue mobilisation and creating fiscal space for development without jeopardising debt sustainability.
To enhance Nigeria’s long-term growth potential, the report underscored the need to address security concerns, reduce bureaucratic red tape, improve agricultural productivity, close infrastructure gaps—particularly in electricity—and boost investments in health, education, and climate resilience.
Directors also stressed the importance of removing structural barriers to private sector credit growth and improving data quality for effective, evidence-based policymaking.
