The International Monetary Fund (IMF) has expressed concerns over the still-high inflation rate in Nigeria, advising the Federal Government to intensify its economic reform efforts.
In a country-focused article released on Monday, titled “How Nigeria Can Unleash Its Economic Potential,” the Fund noted that current challenges such as high inflation, widespread poverty, and weak infrastructure continued to hinder growth despite ongoing policy shifts.
Although it acknowledged the efforts of President Bola Tinubu’s administration, it, however, expressed concern that inflation remained stubbornly above 20 per cent.
While highlighting that poor infrastructure, particularly the unreliable electricity supply, was a major obstacle to economic activity, it also noted that poverty and food insecurity remained widespread, worsened by the absence of a comprehensive social safety net to protect the most vulnerable citizens.
“The country needs stronger and more sustained growth to lift millions of people out of poverty and food insecurity, which is what the authorities are focusing on.”
It emphasised the need for an effective budgetary framework.
“As an essential ingredient for economic development, Nigeria needs an effective budget framework.
”Delivering effective investments in people and infrastructure requires realistic budget assumptions, strong expenditure management, and transparent implementation and reporting, which, in turn, can strengthen accountability.”
The Fund suggested that once the current cost-of-living crisis was eased and cash transfer systems became fully operational, tax rates could be realigned with regional benchmarks.
In the meantime, it stressed that resources freed up from fuel subsidy removal must be efficiently channelled into priority investments.
“For now, the share of revenue that goes to interest spending leaves too little for investment in people and infrastructure. It is, therefore, critical that the substantial financial savings from the removal of fuel subsidies flow to the government to fund priority spending,” it stated.
On inflation, the IMF urged the Central Bank of Nigeria (CBN) to maintain a firm economic and monetary stance.
“For its part, monetary policy should continue to decisively tackle inflation and reduce economic uncertainty,” the IMF wrote.
To meet its development goals, the Fund called on Nigeria to boost domestic revenue generation.
“This is essential given Nigeria’s substantial funding needs in growth-enabling areas such as agriculture, infrastructure, including access to electricity, and climate adaptation. The government’s tax reforms will make it easier to pay taxes and ensure that everyone who owes taxes pays them,” it advised.
