The International Monetary Fund (IMF) has proposed a set of far-reaching policy recommendations to help Nigeria confront its persistent inflation and deepen efforts to reduce widespread poverty.

The proposals came as part of the IMF’s recently concluded Article IV Consultation, which reviewed Nigeria’s macroeconomic outlook and fiscal performance in 2025.

According to the IMF, while Nigeria has made some progress in stabilizing the economy following difficult but necessary reforms, the country’s inflation remains stubbornly high, and poverty continues to affect a large segment of the population.

The Fund noted that headline inflation, though it has moderated from an average of over 31% in 2024, remained high at 23.7% as of April 2025. At the same time, poverty levels are still elevated, with the proportion of Nigerians living in poverty estimated at over 45%. Food insecurity also remains a serious concern, particularly in rural and conflict-affected areas.

In response to these challenges, the IMF has advised Nigerian authorities to implement a carefully balanced approach that strengthens macroeconomic stability while also addressing urgent social needs.

One of the Fund’s key recommendations is a revision of the 2025 federal budget. The IMF pointed out that Nigeria had projected oil prices at $75 per barrel, but actual prices have averaged closer to $68.

This gap, the IMF warned, could create a fiscal imbalance unless budget assumptions are updated and spending is reprioritized. It encouraged the government to build fiscal buffers and reduce reliance on oil earnings by improving domestic revenue mobilization.

The IMF also called for the expansion of targeted social safety nets, particularly cash transfer programs to protect vulnerable households from the impact of inflation and subsidy reforms. While acknowledging the government’s efforts in this area, the Fund noted that limitations in data and financial infrastructure continue to hinder the effective delivery of these programs.

To address inflation, the IMF advised the Central Bank of Nigeria to maintain a tight monetary policy stance. This includes keeping real interest rates positive, sustaining exchange rate stability, and controlling liquidity to dampen inflationary pressures.

Another recommendation was to ensure that fuel subsidy savings—estimated at roughly 2% of GDP following the subsidy removal—are transparently reallocated to fund key social and infrastructure investments. The Fund stressed that the subsidy reform is a critical opportunity for Nigeria to rechannel scarce public resources toward areas that directly benefit the population.

Additionally, the IMF urged Nigeria to strengthen its foreign exchange market, maintain a stable naira, and build external reserves. These measures, according to the Fund, are crucial to restoring investor confidence and improving Nigeria’s long-term economic outlook.

On the structural front, the IMF emphasized the need for tax reform, broadening the tax base, and eliminating wasteful exemptions. It also called for enhanced transparency in public spending and more effective public financial management systems.

In summary, the IMF’s policy roadmap for Nigeria hinges on three pillars: realistic fiscal planning, credible inflation control, and expanded social protection. According to the Fund, if these strategies are effectively implemented, Nigeria could ease its inflation burden, lift more citizens out of poverty, and set itself on a more inclusive and sustainable growth trajectory.

The Nigerian government is expected to respond to the IMF’s recommendations in the coming weeks, as it continues to adjust its economic strategy amidst mounting public pressure and uncertain global economic conditions.