How Tinubu can sustain reform momentum —IMF

Since taking office in the past two years, President Bola Tinubu has embarked on key reforms that have well positioned Nigeria, placing it among countries with a market-driven economy.

While the bold market policies — abolishing costly petrol subsidies, relaxing currency controls and eliminating monetary financing — have begun to stabilize a once dovish economy, challenges persist with poverty being the topmost threat.

In its country focus report entitled ‘How Nigeria Can Unleash its Economic Potential’ the International Monetary Fund (IMF) recommended three major measures the authorities must consider to consolidate the gains of the rather radical reforms.

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Sustained growth

Nigeria needs stronger and sustained growth, a condition that could help lift its 129 million poor citizens out of poverty and food insecurity, according to the Washington-based Fund.

The country recorded its fastest annual growth in more than a decade at 3.4 percent in 2024 with prospects of sustaining the trajectory this year despite heightened global economic uncertainty.

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But with a weakened per capita income of less than $900, more citizens are entrapped in widening poverty and inequality, a situation that undermines the ongoing efforts of the government to revamp the economy.

The IMF asked the government to make “growth more inclusive” and scale up “the existing cash transfer system.”

Effective budget framework

The budget of Africa’s most populous nation in 2025 is the highest on record even though it’s lower in real terms.

The N54.99 trillion budget sets out some ambitious goals such as $75 per barrel oil price and a production capacity of about 2 million bpd, an assumption that stands the risks of being unmet due to the volatility around the globe.

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The IMF says that the country needs “an effective budget framework” to aid economic development.

“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 lender wrote in its report.

It noted that the monetary policy should continue to decisively tackle inflation and reduce economic uncertainty to create a stable atmosphere for investment and growth.

Increase domestic revenue

Nigeria faces chronic revenue shortages, a situation that has seen the country enact four landmark tax bills to plug loopholes in the country’s quest for higher revenues.

According to the Washington-based lender, the share of revenue that goes to interest spending leaves too little for investment in people and infrastructure, emphasising that “the substantial financial savings from the removal of fuel subsidies flow to the government to fund priority spending.”

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In its 2024 budget, deficit stood at N15.5 trillion, 14.6 percent higher than N13.5 trillion recorded in 2023, suggesting that the country is spending more than its earning

“The government should continue to increase domestic revenues. 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 Fund said.

The IMF hinted that once the ongoing cost-of-living crisis abates and the cash transfer system is fully operational, there will be room to align tax rates with those in neighboring countries.