The International Monetary Fund (IMF) has urged Nigeria and other major African economies to strengthen fiscal, monetary and governance reforms as part of efforts to improve economic stability and promote broader-based growth.

In its assessment of reform priorities across eight of the African Union’s largest economies, the IMF identified fiscal reform as a key priority in all but one of the countries reviewed. For Nigeria, the areas highlighted include tax policy, revenue collection, public financial management and more efficient government spending.

The Fund also identified improvements to monetary policy frameworks and policy transmission as priorities for Nigeria, Egypt and Ethiopia. In Nigeria’s case, it said governance reforms should include stronger fiscal transparency, better public financial management and improved anti-corruption measures.

The IMF said stronger domestic revenue mobilisation and more transparent and efficient public spending would help African economies build more resilient institutions. It argued that stronger fiscal and monetary frameworks can support sustainable and inclusive economic growth.

Nigeria’s tax reform agenda

The recommendations come as the Federal Government continues to implement a wide-ranging reform of Nigeria’s tax system. The new framework, which took effect in January 2026, is built around the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.

The reforms are intended to simplify tax administration, remove overlapping taxes, improve compliance and broaden government revenue. They are also designed to reduce the regulatory and tax burden on smaller businesses.

However, businesses continue to cite taxation as a major operating challenge. The Central Bank of Nigeria’s July 2026 Business Expectations Survey found that 70.8 per cent of respondents identified high and multiple taxation as their biggest constraint, ahead of insecurity and high interest rates.

For the housing and construction sectors, the quality of fiscal policy has direct implications. Developers, contractors and property businesses operate within a wider environment shaped by taxation, public infrastructure spending, interest rates and access to finance. Changes that improve tax administration while reducing unnecessary duplication could affect project costs and investment decisions.

Monetary policy remains a concern

The IMF’s call for stronger monetary policy frameworks follows an aggressive tightening cycle by the Central Bank of Nigeria (CBN) in recent years.

After Olayemi Cardoso became CBN governor in 2023, the bank pursued tighter monetary and liquidity conditions alongside foreign exchange reforms. The measures were aimed at addressing inflationary pressures, strengthening market confidence and improving macroeconomic stability.

The Monetary Policy Rate stood at 18.75 per cent in 2023 before the CBN began raising it in 2024. The benchmark rate increased to 22.75 per cent in February 2024 and eventually reached 27.5 per cent by the end of that year.

The CBN also increased banks’ Cash Reserve Ratio from 32.5 per cent to 45 per cent in early 2024 and later to 50 per cent as part of efforts to reduce excess liquidity.

The policy environment has since moved towards gradual easing as inflationary pressures moderated and economic conditions improved. Presidential aide Tope Fasua has nevertheless argued that the country should reconsider its tight monetary stance, warning that persistently high interest rates could restrict economic expansion without delivering the desired reduction in inflation.

Financing risks and infrastructure

The IMF’s concerns also extend to Nigeria’s approach to sovereign financing. In June, the Fund cautioned the country over plans to raise as much as $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank.

The IMF warned that such structures can expose governments to significant risks because their terms may be difficult to evaluate fully.

The Federal Government has also secured about $1.2 billion in financing from the United Arab Emirates for construction of a major section of the Lagos–Calabar Coastal Highway.

Infrastructure financing remains important to Nigeria’s wider development prospects because transport networks and public investment influence access to housing, construction activity, land values and the expansion of urban centres.

For Nigeria, the IMF’s recommendations therefore extend beyond macroeconomic indicators. Stronger public finances, effective monetary policy, transparent governance and disciplined infrastructure financing can shape the operating environment for businesses and determine how effectively public resources support economic and urban development.

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Nigeria’s sweeping economic reforms have earned strong commendation from the International Monetary Fund (IMF), with the global lender pointing to growing stability and signs of durable recovery in its latest Article IV Consultation report.

The IMF noted that recent policy reforms have helped restore macroeconomic stability, describing them as bold and necessary steps toward rebuilding investor confidence and strengthening the country’s financial system.

A key highlight of the reforms is the renewed independence of the Central Bank of Nigeria (CBN), which has significantly reduced its reliance on the controversial “Ways and Means” financing. According to the IMF, these advances have been cut by nearly 90 percent, marking a decisive end to deficit monetisation and reinforcing the foundation for inflation control.

The impact is already visible. Nigeria’s headline inflation, which previously surged above 40 percent, has dropped to 22.9 percent as of May 2025, reflecting the effectiveness of the CBN’s tight monetary policy stance.

The IMF also praised the country’s foreign exchange (FX) reforms, particularly the transition to a unified exchange rate system under a willing-buyer, willing-seller framework. This has improved liquidity, transparency, and price discovery in the FX market.

As a result, Nigeria recorded stronger foreign reserve growth, with reserves rising to $40.9 billion by the end of 2024, while FX inflows reached $6.9 billion in Q1 2025. The gap between official and parallel market rates has also narrowed significantly, falling from over 60 percent to below 3 percent, signalling improved market confidence.

In a further boost, Nigeria returned to the Eurobond market in January 2025 for the first time in four years, reflecting renewed investor confidence and increased portfolio inflows.

The IMF equally acknowledged ongoing reforms in the banking sector, including plans to increase banks’ minimum capital requirements by March 2026. The initiative is expected to strengthen financial institutions, improve credit access, and support long-term economic growth.

Efforts to expand financial inclusion, particularly through digital banking platforms and initiatives like the Women’s Financial Inclusion (Wi-Fi) programme, were also commended as part of broader structural reforms.

Despite the positive outlook, the IMF cautioned that challenges remain, including inflation pressures, infrastructure deficits, insecurity, and fiscal risks. It stressed the need for continued reforms in agriculture, energy supply, healthcare, and education to sustain growth.

“Recent reforms should help establish a strong foundation for sustained and inclusive growth,” the IMF noted, while calling for policy consistency and coordination in navigating global economic uncertainties.

Reacting to the report, CBN Governor Olayemi Cardoso said the assessment reinforces Nigeria’s progress toward restoring credibility and achieving long-term economic stability.

“This affirms that Nigeria is regaining credibility and laying the foundation for inclusive growth. It is also a reminder that discipline and vision remain essential,” Cardoso said.

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The International Monetary Fund has revised Nigeria’s economic growth forecast for 2026 downward to 4.1 percent, citing rising global uncertainties and domestic cost pressures impacting key sectors.

The latest projection represents a 0.3 percentage point drop from the 4.4 percent estimate released earlier in January 2026, reflecting a more cautious outlook for Africa’s largest economy.

Speaking during a briefing for the IMF’s April 2026 Global Financial Stability Report, Deniz Igan explained that the downgrade mirrors broader economic headwinds affecting Sub-Saharan Africa.

She noted that while the region recorded relatively strong growth in 2025, new global shocks—particularly ongoing geopolitical tensions—have weakened momentum.

According to the IMF, rising fuel, fertiliser, and shipping costs are expected to weigh heavily on Nigeria’s non-oil sectors, even as higher crude oil prices provide limited support to overall growth.

“Turning to Nigeria, we have revised growth down by 0.3 percentage points to 4.1 percent in 2026,” Igan said, highlighting the dual pressures shaping the country’s outlook.

The Fund also pointed to declining foreign aid across the region, with bilateral support falling between 16 and 28 percent in 2025—a trend expected to persist and further strain developing economies.

Nigeria’s macroeconomic environment remains challenging, with inflation recorded at about 15.06 percent year-on-year as of February 2026. Meanwhile, interest rates remain elevated, reflecting ongoing efforts by the Central Bank of Nigeria to stabilise prices and manage inflation expectations.

The IMF advised policymakers to maintain tight monetary conditions while closely monitoring exchange rates and inflation trends to sustain economic stability.

Globally, growth is also slowing. The IMF projects world output to decline from 3.4 percent in 2025 to 3.1 percent in 2026, before a modest recovery to 3.2 percent in 2027.

Advanced economies are expected to see slower expansion, with countries like the United States projected to grow at 2.3 percent in 2026, while the United Kingdom is forecast to expand by just 0.8 percent.

In Europe, Germany is expected to recover gradually, while India stands out among major economies with a strong growth projection of 6.5 percent.

Across Sub-Saharan Africa, growth is projected to ease slightly from 4.5 percent in 2025 to 4.3 percent in 2026, reflecting both external shocks and persistent structural challenges.

The IMF linked much of the current uncertainty to rising tensions in the Middle East, particularly around the Strait of Hormuz, a critical global oil transit route. Disruptions in the region have increased energy prices, shipping costs, and insurance premiums, placing additional strain on import-dependent economies like Nigeria.

These pressures have worsened trade conditions, contributed to inflation, and slowed economic expansion—factors now reflected in the IMF’s revised outlook.

Despite the downgrade, the Fund projects a modest recovery for Nigeria in 2027, suggesting that current challenges may ease if global conditions stabilise and domestic reforms gain traction.

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The Federal Government has asked the International Monetary Fund (IMF) to help design a clear and fair system for adjusting fuel prices in Nigeria.

The Permanent Secretary of the Ministry of Petroleum Resources, Dr. Emeka Vitalis Obi, said this in Abuja during a meeting with officials from the IMF and Nigeria’s oil regulators — NUPRC and NMDPRA.

He said the new plan will help protect the economy from sudden fuel price changes and make sure government spending remains stable and transparent.

Dr. Obi explained that removing the fuel subsidy was necessary to keep the country’s finances stable and to focus public funds on roads, social services, and clean energy projects.

He also mentioned ongoing projects like the Nigeria Gas Flare Commercialisation Programme (NGFCP), which aims to stop gas flaring and promote the use of gas for power, fertilizer, and transport.

IMF representative Mr. Diego Mesa praised Nigeria for its efforts and said the IMF team is working with the government on policies that support economic growth, reduce pollution, and make the energy sector more sustainable.

Officials from NUPRC and NMDPRA also promised to keep working to end gas flaring and ensure fair prices for both investors and consumers.

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The International Monetary Fund (IMF) has urged the Nigerian government to intensify structural reforms as it projected the country’s real GDP to grow by 4.2 percent in 2026, up from 3.9 percent in 2025 and 4.1 percent in 2024. The IMF’s latest World Economic Outlook, released in October 2025, stressed that while global growth appears to be stabilizing, emerging economies like Nigeria must adopt credible, transparent, and sustainable policies to ensure long-term economic resilience. It also called for the rebuilding of fiscal buffers, the preservation of central bank independence, and the acceleration of policy reforms.

Global economic growth is expected to decline marginally from 3.3 percent in 2024 to 3.2 percent in 2025 and 3.1 percent in 2026. Advanced economies are projected to grow at an average of 1.5 percent, while emerging and developing markets, including Nigeria, are expected to average just over 4 percent. Inflation is forecast to fall globally, but trends remain uneven, with risks tilted to the upside in countries like the United States, while other economies may see more subdued inflation rates.

During a press briefing at the IMF World Bank Annual Meetings in Washington, Tobias Adrian, Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department, said the depreciation of the naira should not be viewed solely as a negative indicator. According to him, exchange rate movements serve as buffers against economic shocks and can support necessary adjustments in the domestic economy. He described Nigeria’s recent monetary policy improvements, enhanced revenue collection, and improved transparency in foreign exchange reserve management as positive steps. These efforts, he noted, have contributed to a decline in inflation from over 30 percent to about 23 percent and have also strengthened Nigeria’s external reserve position.

Adrian further highlighted that Nigeria’s transition toward a more flexible exchange rate regime aligns with the IMF’s broader recommendations for economic reform. The Fund considers such a move critical in helping Nigeria improve competitiveness and build economic resilience. Other IMF officials present at the briefing, including Deputy Director Athanasios Vamvakidis and Assistant Director Jason Wu, echoed similar sentiments. They underscored the role of flexible exchange rates as automatic stabilizers that can help mitigate the impact of external economic shocks.

The IMF also commended Nigeria’s recent progress in fiscal consolidation and macroeconomic governance. It noted that ongoing reforms in public finance management, along with increased clarity around FX operations, mark a notable improvement in Nigeria’s economic framework. However, the Fund maintained that the reform momentum must continue.

In conclusion, the IMF advised Nigerian authorities to remain committed to structural adjustments, institutional strengthening, and prudent monetary and fiscal strategies. These actions, it said, are essential for sustaining growth, reducing inflationary pressures, and achieving long-term macroeconomic stability.

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The International Monetary Fund (IMF) has said that the depreciation of the Nigerian Naira may serve as a necessary adjustment mechanism and is not inherently harmful to the economy.

Speaking during a press briefing at the IMF–World Bank Annual Meetings in Washington, Tobias Adrian, the IMF’s Financial Counsellor and Director of Monetary and Capital Markets, said exchange rates can play a stabilizing role in economies facing external shocks.

“A depreciating exchange rate is not necessarily a bad thing. It may actually be a good thing to restore equilibrium,” Adrian explained, in response to questions about the Naira’s value. He noted that the Fund generally supports a shift toward more flexible exchange rate regimes.

Adrian acknowledged that Nigeria has made progress in strengthening its policy frameworks. “We’ve seen many steps on the monetary policy side. Revenue collection has improved, and there’s greater transparency in foreign exchange reserve reporting,” he said.

He pointed to signs of improvement in Nigeria’s macroeconomic indicators, including a decline in inflation from over 30% in 2024 to around 23% in 2025. “The direction of travel appears to be positive,” he added.

Despite this progress, Adrian warned that Sub-Saharan Africa, including Nigeria, still faces vulnerabilities. With global financial conditions tightening and capital flows becoming more volatile, countries in the region risk exposure to sudden outflows, especially if underlying economic fundamentals are weak.

He urged governments to maintain strong monetary and fiscal policies, while also investing in structural reforms such as tax mobilization and debt management. “Nigeria is making efforts in these areas, and continued support from the international community will be important,” Adrian said.

Commenting on the global regulatory landscape for digital currencies, Adrian welcomed the introduction of stablecoin regulations in several countries. He cited recent legislation in the United States, as well as existing regulatory frameworks in the European Union and Japan, as examples of progress.

“Globally, there are around $400 billion in outstanding stablecoins, most of which are denominated in U.S. dollars. Regulations are beginning to catch up with the market,” he said.

The IMF, he noted, released a comprehensive policy framework for crypto assets in 2023, which outlines key regulatory principles and recommendations. While implementation differs across countries, Adrian said the overall direction of regulatory efforts is broadly aligned with the Fund’s guidance.

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