The International Monetary Fund (IMF) has warned the Federal Government to be fiscally prudent in the face of mounting global trade tensions and tightening financial conditions, particularly as Nigeria’s earnings from commodity exports could significantly dip if global demand crude oil drops
The Washington D.C-based development finance institution gave the warning during the Global Financial Stability Report media briefing held on Tuesday, at the ongoing IMF/World Bank Spring Meetings in Washington, D.C.
Speaking during the Financial Stability Report media chat, the Fund’s Assistant Director, Monetary and Capital Markets Department, Jason Wu, noted that Nigeria’s macroeconomic indicators had exhibited some resilience in recent months based on current fiscal and other reforms and an improved policy framework.
He said: “In the case of Nigeria, macroeconomic performance has held up, GDP growth has been fairly consistent, and inflation has been coming down,”
The economist attributed part of the improved indices to policy reforms implemented by Nigerian authorities, including the liberalisation of the exchange rate regime.
Wu recalled that earlier this year, Nigeria’s sovereign credit spreads lowering, adding that the reforms by the Federal Government, including the liberalisation of exchange rates, have helped to buoy the economy’s trajectory.
Despite the achievements, Wu warned that Nigeria remained exposed to external vulnerabilities, especially as global financial markets face heightened uncertainty and investor risk appetite weakens, adding that this some increases in sovereign spreads that will challenge the external picture for Nigeria could be seen.
While noting that Nigeria’s sovereign spread has increased in recent weeks as stock markets globally have declined. The IMF chief maintained that the country’s heavy reliance on commodity exports made it particularly vulnerable to trade disruptions and geopolitical developments that affect global demand for oil and gas.
He further clarified: “If trade tensions are going to lead to lower global demand for commodities, this will obviously weigh on the revenue that they will receive. Both of those developments would counsel that authorities remain quite vigilant to these developments and take appropriate policies to counter them.”
Meanwhile, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said that in the face of dwindling revenues and rising fiscal pressure, the Federal Government would prioritise the payment of salaries, pensions, debt servicing, and national security obligations in its budget implementation this year
Edun, who spoke on Tuesday at the Nigerian Investor Forum held on the sidelines of the ongoing Spring Meetings of the International Monetary Fund and World Bank in Washington, DC, said the government was committed to maintaining fiscal discipline by cutting waste, conserving resources, and aligning spending with actual revenue.
“What do you do when your budget revenue is below expectation?” he said. “You have to come back down, conserve, and prioritise. That’s exactly what we have to do to ensure we maintain fiscal congruence.”
The minister, during his contributions at the Nigerian Investor Forum held Tuesday on the sidelines of the ongoing IMF-World Bank Group’s Spring Meetings, restated the Nigerian government’s commitment to maintaining fiscal discipline by blocking leakages, conserving resources, and aligning spending with actual revenue.
He said: “What do you do when your budget revenue is below expectation? You have to come back down, conserve, and prioritise. That’s exactly what we have to do to ensure we maintain fiscal congruence.”
Edun hinted that a forensic audit of the Nigerian National Petroleum Company Limited (NNPCL) would soon be conducted following months of scrutiny over the financials of the company, including its controversial N2.7 trillion fuel subsidy refund claim now being reviewed by auditors.
The Fund’s latest economic projections showed that Nigeria’s current account surplus was expected to significantly dip from 9.1% of GDP in 2024 to 6.9% in 2025, and further to 5.2% in 2026.
This is even as the IMF projected that Nigeria’s headline inflation would average 26.5% in 2025 and that the rate was expected to surge to 37.0% in 2026, based on the rebased CPI by the National Bureau of Statistics (NBS).
