IMF Urges Nigeria to Adjust 2025 Budget Over Falling Oil Prices*

The International Monetary Fund (IMF) has called on the Nigerian government to revise its proposed ₦54.99 trillion 2025 budget to reflect declining global oil prices and increasing economic risks.

In its latest Article IV Consultation, the IMF acknowledged Nigeria’s recent macroeconomic reforms — including the removal of fuel subsidies, the halt of central bank financing of fiscal deficits, and the liberalization of the foreign exchange (FX) market. However, it warned that more work is needed to sustain progress and protect the economy from external shocks.

The Fund stressed that implementing the budget without adjusting for lower oil revenues could expand the fiscal deficit from 4.1% to 4.7%, worsening Nigeria’s debt burden.

Despite a 3.4% GDP growth in 2024, the IMF noted that growth remains too low on a per capita basis, with poverty and food insecurity rising. It forecasts a similar 3.4% growth for 2025, driven by improved oil production, the commissioning of a new refinery, and a strong services sector.

The IMF urged the Central Bank of Nigeria (CBN) to maintain its tight monetary policy until inflation — currently at 22.97% year-on-year in May 2025 — shows consistent decline. It also stressed the importance of keeping real interest rates positive to support exchange rate stability and investor confidence.

On FX management, the Fund praised recent reforms but emphasized the need for a robust, transparent intervention framework to manage volatility and protect against short-term portfolio risks.

The IMF also welcomed Nigeria’s tax policy reforms and advised the government to improve budget execution, public spending quality, and the delivery of targeted cash transfers to vulnerable citizens.

Additionally, it called for stronger regulation of mortgage lending, consumer finance, fintech, and crypto assets, and urged swift completion of reforms to exit the FATF grey list.

While Nigeria has made strides in stabilizing its economy, the IMF concluded that deeper investment in infrastructure, agriculture, education, and security is critical to achieving inclusive growth and long-term development.

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