IMF — Nigeria Needs to Fix Misalignment in Budget and Oil Revenue

The International Monetary Fund (IMF) has concluded its 2025 annual Article IV Mission for Nigeria and results released for on its site.

The results highlights the issues with the budget as regard to oil prices. It utilizes several economic fators to explain why Nigeria may need to rethink its budget.

Stopping central bank funding of the fiscal deficit, subsidy removal, and moving toward a more unified forex market have repositioned Nigeria’s macroeconomic stability and enhanced resilience. Nigeria successfully tap the Eurobond market and leading to a resumption of portfolio inflows.

Regardless of these major reforms that are ongoing in the country, poverty and food insecurity have risen, and the government is now focused on raising growth.

The country has also seen major growth driven by several sectors. Growth is expected at 3.4 % in 2025 (slightly revised from earlier IMF forecast of 3 %) and about 3.2 % in 2026. However, growth per person remains low, and inflation continues to be high.

Budget Risks from Oil Price Drop

Nigeria’s 2025 budget assumed oil at $75/barrel, but prices are closer to $68/barrel—a shortfall affecting government revenue. The IMF advised recalibrating spending and building fiscal buffers as social concerns continue to grow.

There is rising poverty and food insecurity despite reforms. To support vulnerable Nigerians, the IMF recommended expanding cash transfers and social-safety nets.

Other Noteworthy Factors – Public Debt & Fiscal Metrics

Total public debt is nearly 51 % of GDP, with deficits around 4–5 % of GDP. Non-oil primary balance remains negative, highlighting reliance on volatile oil revenues.

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Policy recommendations: Recalibrate the budget, build reserves, deepen structural reforms (e.g., tax, banking), and support private-sector-led growth. Formal endorsement of mission findings, with ongoing monitoring and technical advice.

While this isn’t a lending program like an Extended Credit Facility, it sets the stage for any future financial assistance and bolsters investor confidence.

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The IMF Article IV Mission

This is a mission by the Fund’s that allows for the review of a member country’s economy, policies, and outlook.

IMF staff visiting the country, meet with government officials, prepare detailed staff reports and present the report to the IMF Executive Board.