The Presidency has pushed back against the International Monetary Fund’s recent evaluation of Nigeria’s economic trajectory, criticising what it described as an overly severe appraisal of the nation’s reform efforts, inflation trends, and poverty situation.
Last week, the IMF released a report titled How Nigeria Can Unleash Its Economic Potential, in which it expressed alarm over the country’s stubbornly high inflation and the sluggish pace at which reforms are translating into tangible improvements for citizens.
The report read: “Upon taking office in 2023, the new government faced low growth and rising poverty. Between 2014 and 2023, real per capita GDP declined on average by 0.7 per cent annually. In 2023, the poverty rate stood at 42 per cent.
‘’This difficult situation was compounded by limited access to dollars, which meant that people had to turn to the parallel currency market and thereby pay a much higher price than the official rate. In the meantime, public finances were strained by an opaque fuel subsidy system, which also caused recurrent petrol scarcity. And central bank financing of the fiscal deficit pushed up inflation.
“In response to these challenges, Nigerian policymakers have embarked on a series of bold reforms over the last two years. In 2023 the new government and the Central Bank of Nigeria liberalised the foreign exchange market, stopped central bank financing of the fiscal deficit, and reformed fuel subsidies. The government also strengthened revenue collection, which is still one of the world’s weakest.
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“Since these reforms were implemented, international reserves have increased, and anyone can now access foreign exchange in the official market. Nigeria successfully returned to international capital markets last December and was recently upgraded by rating agencies. A new domestic, private refinery is positioning Nigeria up the value chain in a fully deregulated market.
Despite acknowledging Nigeria’s economic strides, the IMF cautioned that serious hurdles remain on the path to stability. It noted that inflation continues to hover above 20 percent, while unreliable infrastructure – particularly the country’s fragile power supply – continues to stifle productivity.
The Fund raised concerns about the high levels of poverty and food insecurity, pointing out that Nigeria still lacks a robust social protection system to shield its poorest citizens from economic shocks.
To chart a more sustainable path forward, the IMF urged the government to establish a more disciplined budgeting framework and redirect savings from the scrapped fuel subsidy towards critical sectors that can spur development.
It further advised that once Nigeria’s cash transfer programme becomes fully operational, tax policies should be recalibrated to match regional standards. The Central Bank of Nigeria was also encouraged to maintain a decisive monetary stance to rein in inflation and rebuild trust in the economy, stressing that only stronger, long-term growth can lift millions of Nigerians out of poverty and hunger.