IMF says Nigeria’s reforms improving economy, but poverty remains severe

The International Monetary Fund (IMF) has said Nigeria’s economic reforms over the past three years have strengthened macroeconomic stability and improved resilience, but warned that poverty and food insecurity remain severe across the country.

The Fund stated this in its latest Article IV Consultation report on Nigeria released on Tuesday, noting that while reforms have delivered better macroeconomic outcomes, living conditions for many Nigerians remain difficult.

The report added that rising global prices of fuel, food, and fertilizer are expected to improve Nigeria’s export earnings and fiscal revenues but could also intensify inflationary pressures and worsen hardship for vulnerable households.

What the IMF is saying

The IMF estimated that Nigeria’s economy grew by 4% in 2025 and projected growth at 4.1% in 2026 despite persistent inflationary pressures and higher transportation and food costs weighing on economic activity.

• “Strong reforms over the past three years have yielded improved macroeconomic outcomes and built resilience. Still, conditions for many Nigerians remain difficult.  
• “Poverty reached 63 percent (national poverty line) and 27 million Nigerians are estimated to have faced food insecurity in the fall of 2025,” the IMF said in the report.

Inflation, which had been on a downward trend for over a year, rose slightly to 15.4% year-on-year in March 2026 as international fuel and food prices filtered into the domestic economy.

However, the Fund projected that the broader disinflation trend would continue in the second half of 2026.

IMF noted that Nigeria’s external reserves also recorded improvements during the review period. Gross international reserves rose to $46 billion in 2025 from $40 billion at the end of 2024, supported by current account surpluses, foreign participation in central bank open market operations, and a Eurobond issuance.

Net international reserves increased to $35 billion at the end of 2025 from $23 billion recorded a year earlier.

More insights

Despite improvements in some macroeconomic indicators, the IMF said Nigeria’s consolidated fiscal deficit widened to 4.4% of GDP in 2025.

According to the report, non-oil revenue collections met targets, but oil revenues underperformed budget expectations.

The shortfall was partly offset by lower-than-expected capital expenditure implementation, while some additional capital projects executed outside the formal budget framework were later incorporated through repeal and reenactment bills.

The IMF Executive Board called for a neutral fiscal stance in 2026 to support disinflation and macroeconomic stability while protecting critical and social spending.

Directors also welcomed Nigeria’s recent tax reforms but noted that additional tax measures may still be required over the medium term, especially to fund expanded cash transfer programmes targeted at vulnerable Nigerians.

The Board further expressed concerns over off-budget spending and complex financing structures, urging Nigerian authorities to strengthen public financial management systems, fiscal reporting standards, transparency, and accountability mechanisms.

What you should know 

The IMF’s observation of severe poverty amid reforms was also acknowledged recently by President Bola Tinubu.

The President, while delivering his acceptance speech after emerging as the All Progressives Congress (APC) presidential flagbearer for the 2027 elections, admitted that Nigerians are still grappling with the impact of rising living costs and economic adjustments despite reforms implemented by his administration over the last three years.

Nairametrics reported that Nigeria’s headline inflation rate rose to 15.69% in April 2026, up from 15.38% recorded in March, as Nigerians continue to battle with high costs of essential commodities.

The International Monetary Fund (IMF) has said Nigeria’s economic reforms over the past three years have strengthened macroeconomic stability and improved resilience, but warned that poverty and food insecurity remain severe across the country.

The Fund stated this in its latest Article IV Consultation report on Nigeria released on Tuesday, noting that while reforms have delivered better macroeconomic outcomes, living conditions for many Nigerians remain difficult.

The report added that rising global prices of fuel, food, and fertilizer are expected to improve Nigeria’s export earnings and fiscal revenues but could also intensify inflationary pressures and worsen hardship for vulnerable households.

What the IMF is saying

The IMF estimated that Nigeria’s economy grew by 4% in 2025 and projected growth at 4.1% in 2026 despite persistent inflationary pressures and higher transportation and food costs weighing on economic activity.

• “Strong reforms over the past three years have yielded improved macroeconomic outcomes and built resilience. Still, conditions for many Nigerians remain difficult.  
• “Poverty reached 63 percent (national poverty line) and 27 million Nigerians are estimated to have faced food insecurity in the fall of 2025,” the IMF said in the report.

Inflation, which had been on a downward trend for over a year, rose slightly to 15.4% year-on-year in March 2026 as international fuel and food prices filtered into the domestic economy.

However, the Fund projected that the broader disinflation trend would continue in the second half of 2026.

IMF noted that Nigeria’s external reserves also recorded improvements during the review period. Gross international reserves rose to $46 billion in 2025 from $40 billion at the end of 2024, supported by current account surpluses, foreign participation in central bank open market operations, and a Eurobond issuance.

Net international reserves increased to $35 billion at the end of 2025 from $23 billion recorded a year earlier.

More insights

Despite improvements in some macroeconomic indicators, the IMF said Nigeria’s consolidated fiscal deficit widened to 4.4% of GDP in 2025.

According to the report, non-oil revenue collections met targets, but oil revenues underperformed budget expectations.

The shortfall was partly offset by lower-than-expected capital expenditure implementation, while some additional capital projects executed outside the formal budget framework were later incorporated through repeal and reenactment bills.

The IMF Executive Board called for a neutral fiscal stance in 2026 to support disinflation and macroeconomic stability while protecting critical and social spending.

Directors also welcomed Nigeria’s recent tax reforms but noted that additional tax measures may still be required over the medium term, especially to fund expanded cash transfer programmes targeted at vulnerable Nigerians.

The Board further expressed concerns over off-budget spending and complex financing structures, urging Nigerian authorities to strengthen public financial management systems, fiscal reporting standards, transparency, and accountability mechanisms.

What you should know 

The IMF’s observation of severe poverty amid reforms was also acknowledged recently by President Bola Tinubu.

The President, while delivering his acceptance speech after emerging as the All Progressives Congress (APC) presidential flagbearer for the 2027 elections, admitted that Nigerians are still grappling with the impact of rising living costs and economic adjustments despite reforms implemented by his administration over the last three years.

Nairametrics reported that Nigeria’s headline inflation rate rose to 15.69% in April 2026, up from 15.38% recorded in March, as Nigerians continue to battle with high costs of essential commodities.