## 1. Reform Journey Since 2023 ## Source details **Canonical URL:** [1. Reform Journey Since 2023](https://www.imf.org/-/media/files/publications/cr/2025/english/1ngaea2025001-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1ngaea2025001-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1ngaea2025001-print-pdf.pdf.json) --- ### Context - Policy actions since 2023: - Liberalized and strengthened the foreign exchange market. - Removed fuel subsidies. - Ended monetary financing. - Improved revenue administration and stepped up security around critical oil infrastructure and farmland. - Key outcomes and challenges: - Naira more stable and portfolio inflows returned. - Nigeria tapped external financial markets in late 2024 and achieved a credit rating upgrade in April 2025. - Poverty estimated at 46 percent in 2024; 31 million Nigerians deemed food insecure. - Official development assistance in 2023: $1.5 billion (0.4 percent of GDP), of which $1 billion from the United States and $0.3 billion from the European Union. - Political context: government halfway through its term; VAT distribution change and VAT rate hike halted; public discontent over telecom and electricity tariff increases; insecurity remains a constraint. ### Recent economic developments - Growth and inflation: - GDP growth: 3.4 percent in 2024. - Per-capita growth: around 1.3 percent. - Hydrocarbon GDP growth: 5.5 percent in 2024. - Non-hydrocarbon GDP growth: 3.3 percent in 2024. - Annual average inflation: surged to 31 percent in 2024; 24 percent year-on-year in 2025Q1. - Social protection: - Cash transfer system reached 5½ out of 15 million targeted households as of March 2025; each received up to 3 transfers of naira 25,000. - Fiscal performance (2024): - Consolidated government deficit (below the line): improved to 4.1 percent of GDP in 2024, from 4.8 percent of GDP in 2023. - Two-thirds of net fiscal financing needs met externally, including a $2.2 billion Eurobond issuance and World Bank support. - Government retired a third of outstanding central bank “ways and means” financing through additional issuance and securitization. - Fiscal data subject to frequent and large revisions. - External sector and reserves: - Current account surplus: increased to 9 percent of GDP in 2024. - Gross international reserves (GIR): $40 billion at end-2024, up from $33 billion at end-2023. - Net international reserves (NIR): $23 billion at end-2024. - Exchange rate: depreciated by 4 percent year to mid-May 2025 amid intensifying global headwinds. - Banking sector indicators (end-2024): - Capital adequacy: 15.3 percent (end-2024), up from 13.3 percent in 2023. - Liquidity ratio: 49 percent (end-2024; regulatory minimum 30 percent). - Return on assets: 3.5 percent. - Non-performing loans (NPLs) ratio: 4.5 percent (does not include banks in liquidation). - Bank supervisory actions in 2024: CBN revoked one license and placed three banks under a special supervisory regime for not meeting minimum capital. ### Outlook and risks - Scenario framework: - Baseline aligned with the “post-April 9” WEO scenario (90-day pause in U.S. tariffs); oil prices still lower than Nigeria’s 2025 budget assumption. - Adverse scenario: resurgence of global uncertainty and further downward pressure on oil prices. - Upside scenario: improvement in global risk sentiment, oil prices, and stepped-up domestic reform momentum. - Baseline projections and key numbers: - GDP growth projected at 3.4 percent in 2025, stabilizing around 3½ percent over the medium-term. - Per-capita growth in baseline: about 1.3 percent. - Capital inflows expected to recover in the medium-term, bringing GIR to $46 billion by 2030. - New refinery expected to boost growth by 1½ percent in 2025. - Key downside risks: - Hydrocarbon receipts vulnerable to price volatility and security conditions; prolonged/sharp decline in oil prices and/or deterioration in security would erode exports and fiscal revenues and could trigger oil-pledged contingent liabilities or loss of market access. - Deterioration in global risk appetite and tighter financing conditions would limit external funding access and raise borrowing costs. - Climate shocks affecting agriculture and infrastructure and/or deterioration in security could worsen food insecurity and increase fiscal pressures. - Delayed and/or uncoordinated policy response and increased popular resistance to reforms could complicate macroeconomic policies ahead of general elections. - Authorities’ view: share staff’s assessment of external headwinds but more optimistic on short-run hydrocarbon production improvement and see upsides in agriculture from better security and extension services. ### Policy implications - Baseline: maintain tight macroeconomic policies while prioritizing growth-enhancing investment and support to the most vulnerable. - Adverse scenario: further adjustment needed to offset permanently lower hydrocarbon revenues; emphasize spending quality. - Upside scenario: faster revenue mobilization or favorable external conditions can provide space to accelerate development spending. ### Implementation status of selected reforms - Macroeconomic policies tightened in 2024. - Cash transfers: 5½ out of 15 million households enrolled as of March 2025; up to 3 transfers of naira 25,000 each. - CBN developing roadmap to adopt inflation targeting with Fund CD; CBN developed an FXI framework with Fund support. - Comprehensive set of tax reform bills to modernize VAT and company income tax laws approved by parliament. - Implicit fuel subsidies abolished in October 2024; full savings yet to accrue to the budget. - Electricity tariffs adjusted upward by 300 percent in April 2024 for Band A consumers (>20 hours/day). - Progress on AML/CFT deficiencies to exit FATF “grey list.” --- ### Fiscal outlook and staff baseline (section from page header "Absent policy actions...") - Budget assumptions and staff baseline: - 2025 budget based on optimistic hydrocarbon revenue projections and did not account for the price decline since April; budget includes allocations of $200 million to partially offset $440 million cuts in USAID disbursements to the health sector. - Staff projects a consolidated fiscal deficit of 4.7 percent of GDP in 2025; higher than the budget owing to lower oil prices and production and already reflects lower-than-budgeted capital expenditure. - Baseline implies an expansionary fiscal stance in 2025 relative to 2024, driven by the wage bill, transfers and capital expenditures. - Baseline does not yet factor in gains from the fuel subsidy removal; full-year savings estimated at 2 percent of GDP if realized. - Staff recommendation on fiscal stance: - Recommend a neutral fiscal stance in 2025 to safeguard macroeconomic stabilization while prioritizing growth-enhancing investment and support to the most vulnerable. - If fuel subsidy savings are not realized starting H2-2025 and tax reforms are not expected to deliver significant 2025 revenue gains, adjustment would have to come from the expenditure side (0.6 percent of GDP), with staff recommending: - Prioritize adjustments to recurrent spending to protect growth-enhancing investments. - Accelerate delivery of cash transfers to assist the poor under the cash transfer program. - Rationalize capital expenditures to preserve critical projects with the highest contribution to growth and job creation. - In the adverse scenario, further adjustment will be needed while seeking opportunities to advance or pre-commit to revenue mobilization measures to create fiscal space while safeguarding debt sustainability. ### Revenue mobilization and reform prospects - Nigeria has one of the lowest revenue collection ratios worldwide despite recent improvements. - Tax reform bills approved by parliament to modernize VAT and CIT systems; decision not to raise the VAT rate now will reduce consolidated government revenue by up to ½ percent of GDP in authorities’ estimates (federal impact minimal; loss falls on state and local governments). - Authorities’ estimate of potential revenue gains (cumulative after full implementation, percent of GDP): - Potential revenue gains from permanent measures: 4.2 - VAT reforms (incl. VAT on fuel products, and fiscalization/e-invoicing): 1.2 - CIT reforms (incl. top up tax on MNEs, rationalization of incentives, and capital gains tax reform): 1.0 - Excise reforms (incl. on telecom, gaming, lotteries): 0.1 - Other tax policy and administrative reforms (incl. using data and cross-validation for improving compliance): 1.8 - Potential revenue gains from one-off measures (incl. windfall tax and voluntary disclosure program): 1.9 - IMF CD is supporting revenue reform agenda, including with a resident advisor. ### Financing strategy and public debt dynamics - Envisaged 2025 financing mix aligned with medium-term debt strategy: 55-45 percent mix of domestic and external instruments, and lengthening maturities as interest rates decline. - With staff’s deficit projection, legal limits for domestic and external issuance would not cover 2025 financing needs; authorities still have $1.1 billion space under the 2024 authorization to issue domestic fx securities. - Public debt: rose to 53 percent of GDP in 2024 from 49 percent of GDP in 2023. - Staff baseline projects public debt at 52 percent of GDP in 2025 with a downward path thereafter in the baseline (52 percent of GDP in 2025 stated in broader DSA tables). - Risks to debt sustainability: worsening sentiment or oil prices, weak revenue mobilization, or expenditure slippages in the run-up to elections. - Government arrears to NNPCL, electricity companies and pensioners—once consolidated—will add to debt; any pre-export financing deal would reduce future revenues. ### Budget process and public investment management - Budget systematically relies on overly optimistic revenue assumptions leading to intra-year capital expenditure revisions. - Staff encourages improved fiscal forecasting for the 2026 budget, integration of the development agenda as the main budget narrative, expenditure reviews, and public investment management evaluation. - Fiscal data quality is weak; a committee set up to harmonize fiscal data across fiscal agencies. ### Authorities’ fiscal view - Authorities confident increased oil production and in-year adjustments will compensate for lower oil prices in 2025. - Stressed resolve to bring fuel subsidy removal savings to the budget, continue domestic revenue mobilization, diversify financing sources, and rely more on private sector involvement in infrastructure delivery. ### Monetary policy, disinflation and CBN actions - CBN tightened monetary policy: Monetary Policy Committee hiked its policy rate by 875 bps in 2024 and stayed on hold in February and May 2025; ex-post and ex ante policy rates are now positive in real terms. - CBN actions: widened the asymmetric corridor, increased the cash reserve requirement to 50 percent and issued OMOs to manage liquidity. - Staff recommends CBN maintain a tight stance given still high inflation and external pressures; data-dependent approach appropriate. - Announcing a disinflation path could help anchor inflation expectations and facilitate transition to an inflation targeting regime; a neutral fiscal policy stance in 2025 would complement monetary policy and allow reducing the nominal policy rate while keeping the real policy rate positive. - 2007 CBN Act needs modernization to enshrine primacy of price stability and strengthen CBN autonomy and governance arrangements. ### External position, FX interventions and capital flow considerations - External position at end-2024 assessed as moderately stronger than level implied by fundamentals and desirable policies. - Outflow of some $2 billion in portfolio investments through April with limited CBN interventions demonstrated fx market functioning under stress and resilience. - Positioning of nonresident portfolio investors in OMOs (and to a lesser extent in treasury bills) exposes Nigeria to rollover risks during heightened uncertainty. - Temporary capital flow measures (CFMs) may be warranted in crisis circumstances as part of a broader policy package and consistent with the Fund’s Institutional View. - Recent FX market reforms (Electronic Foreign Exchange Matching System and FX Code) have supported price discovery and liquidity; a robust FX intervention (FXI) framework is needed to focus FXIs on containing excess volatility. --- ### Financial sector resilience and credit - Strengthening banking sector welcomed; large exposures to fx loans, hydrocarbon sector and single borrowers are risks. - Banks have raised half of the required capital to meet new minimum capital thresholds effective March 2026; recapitalization will enhance lending capacity and loss absorption. - CBN conducts monthly stress tests and plans to apply Basel III standards in 2026; authorities intend to phase out remaining Covid regulatory forbearance by June 2025. - Staff encourage improved NPL reporting and recognition of impaired loans; some banks delayed NPL recognition by granting bullet loans. - Need a sound regulatory regime for new mortgage and consumer lending schemes and stronger governance to protect credit quality. - Private sector credit remains weak and concentrated in oil and gas with virtually no new lending to SMEs and households; strengthening creditor rights and expediting judicial resolution of commercial disputes would boost private sector credit. ### Fintech, crypto, and AML/CFT - Financial inclusion: 74 percent of adults had access to financial services in 2024. - Rapid fintech and crypto growth poses fraud and other risks requiring regulation and enforcement. - Nigeria pioneered crypto regulations (licensing for crypto exchanges and AML/CFT obligations for crypto asset service providers), but enforcement uneven; some unlicensed exchanges operate due to enforcement challenges. - CBN plans upgraded licensing requirements for fintech firms. - Authorities have undertaken measures to strengthen AML/CFT framework in line with Nigeria’s FATF action plan; resolving remaining weaknesses is essential to exit FATF “grey list.” --- ### Dangote Refinery impact (Annex IV summary) - Project start and scale: - Dangote Refinery started production in January 2024. - Total investment: $20 billion (5.5 percent of 2023 GDP). - Production capacity: 650,000 barrels/day. - Product composition: Gasoline (PMS) 55 percent, Diesel (incl. Marine Diesel) 26 percent, Jet Fuel 19 percent. - Steady-state assumptions and key parameters: - Refinery operates at 90 percent of capacity. - Domestic crude supplies 50 percent of needed crude oil; remaining crude imported. - Crude Oil Price ($, 2026): 62. - Projected impacts (reported as Billion USD and Percent of 2026 GDP): - Positive effect total: 18.7 (11.5 percent of 2026 GDP) - Decrease of refined fuel and Polypropylene imports: 11.4 (5.3) - Increase in refined fuel, Polypropylene, Carbon Black and Sulfur exports: 7.3 (3.4) - Negative effect total: 13.2 (6.1) - Increase in import of crude oil by Dangote: 6.6 (3.1) - Decrease in export of crude oil by NNPCL and IOCs: 6.6 (3.1) - Current account change: 5.5 (5.3) - Gross reserves change: 5.5 (5.3) - Interpretation: - Net positive effect: import substitution ($11.4 billion) plus higher exports ($7.3 billion) outweigh reduced crude exports and higher crude imports (each $6.6 billion), improving CA by around $5.5 billion (2.6 percent of 2026 GDP) and raising official reserves by around $5.5 billion annually—assuming value-added and receipts are kept onshore. - Direct fiscal impact limited due to FTZ location with duty-free and tax exemptions; indirect positive fiscal impact through growth spillovers expected to more-than-offset revenue loss from lower customs duties on PMS imports (0.2 percent of GDP). - Growth and employment: triggered infrastructure development and created around 150,000 direct and indirect jobs; expected to increase non-oil GDP by around 1½ percent by 2026; training program has 60,000 beneficiaries so far. --- ### Adverse scenario (Annex VI) — triggers, impacts, and policy responses - Crisis triggers: - Significant deterioration in risk appetite with portfolio repatriation and residents seeking safe havens in U.S. dollars, gold, or crypto assets. - Further decline in oil and gas prices. - Economic impacts: - Rapid naira depreciation and loss of market confidence; reserves insufficient to meet rapidly growing fx demand; parallel market premium widens. - Inflationary pressures accelerate; purchasing power erosion hits poor households; poverty and food insecurity rise. - Import compression may affect critical food and medical supplies. - GDP growth, domestic demand and non-oil growth depressed; unemployment and underemployment rise. - Financial sector pressures: asset quality deterioration, potential bank resolution needs, tighter lending standards, and potential systemic stress. - Macroeconomic policy implications: - Fiscal financing pressures as fx spending needs remain while fx revenues decline; higher domestic yields increase interest spending; government may be de facto shut out from external financing. - Monetary policy: tighten to keep policy rate positive in real terms; OMOs to mop up excess naira liquidity. - Policy response priorities: - Coherent and coordinated macroeconomic policy and reform agenda to restore confidence. - Mobilize external financing from development partners to smooth adjustment. - Exchange rate flexibility as part of adjustment; consider temporary outflow CFMs as part of a broader package and consistent with the IMF Institutional View. - Strengthen fiscal institutions, present a credible revised 2025 budget reflecting current developments, accelerate social safety net roll-out, and implement the new FXI framework and determine the FXI budget. --- ### Data issues and capacity development (Annex IX highlights) - Data adequacy assessment: Rating 1/: C; Median Rating: CCCCCBC. - Key data shortcomings: - National accounts: lack of expenditure data and reconciling GDP deflator with CPI and terms of trade. - Prices: rebasing described as setting 2024 as base year while published data shows December 2024 as the base month; backcasted data delays. - Fiscal data: inconsistent data across government sources, limited coverage and delays. - External data: large errors and omissions, lack of granularity of reserves composition, delays in balance of payments data. - Monetary data: long delays in publishing financial soundness indicators and limited granularity. - Corrective actions and CD priorities: - Staff liaising with STA and providing CD on real sector, prices (CPI and PPI), external sector statistics (ESS) and government finance statistics (GFS). - Immediate need for authorities to take up CD from STA for external and fiscal statistics. - Fiscal coordination committee created to harmonize fiscal data across agencies. - Common Indicators Required for Surveillance: table entries capture multiple reference dates and frequencies as of May 16, 2025. --- ### Key projections and macro aggregates (selected tabulated projections preserved) - Real GDP (annual): 2024 (Est.): 3.4; 2025 (Proj.): 3.4; 2026 (Proj.): 3.2; 2027 (Proj.): 3.3; 2028 (Proj.): 3.3; 2029 (Proj.): 3.5; 2030 (Proj.): 3.5. - Consumer price index (annual average): 2024 (Est.): 31.4; 2025 (Proj.): 24.0; 2026 (Proj.): 23.0; 2027 (Proj.): 17.0; 2028 (Proj.): 15.0; 2029 (Proj.): 12.0; 2030 (Proj.): 10.0. - Consolidated government overall balance (percent of GDP): 2024 (Est.): -2.6; 2025 (Proj.): -4.7; 2026 (Proj.): -4.9; 2027 (Proj.): -4.0; 2028 (Proj.): -3.9; 2029 (Proj.): -4.0; 2030 (Proj.): -3.9. - Public gross debt (percent of GDP): 2024 (Est.): 52.9; 2025 (Proj.): 52.0; 2026 (Proj.): 50.8; 2027 (Proj.): 49.9; 2028 (Proj.): 48.3; 2029 (Proj.): 47.2; 2030 (Proj.): 46.2. - Current account balance (percent of GDP): 2024 (Est.): 9.2; 2025 (Proj.): 7.0; 2026 (Proj.): 4.6; 2027 (Proj.): 3.7; 2028 (Proj.): 2.8; 2029 (Proj.): 1.9; 2030 (Proj.): 0.9. - Price of Nigerian oil (US$ per barrel): 2024 (Act): 79.9; 2025 (Proj.): 67.7; 2026 (Proj.): 63.3; 2027 (Proj.): 63.7; 2028 (Proj.): 64.7; 2029 (Proj.): 65.6; 2030 (Proj.): 65.6. - Gross international reserves (US$ billions, CBN definition): 2024 (Act): 40.2; 2025 (Proj.): 36.4; 2026 (Proj.): 39.1; 2027 (Proj.): 41.1; 2028 (Proj.): 43.2; 2029 (Proj.): 44.8; 2030 (Proj.): 45.8. - Selected financial soundness indicators (end-2024): Regulatory Capital to Risk-Weighted Assets: 15.3; Non-Performing Loans to Total Gross Loans: 4.9; Return on Assets: 3.5; Liquid Asset Ratio: 18.3. ### Engagement and Country Strategy (Annex I summary) - Fund engagement priorities: safeguard macroeconomic stability, strengthen policy frameworks, support revenue mobilization, social safety nets, FX intervention design, inflation targeting, AML/CFT reforms, public financial management, and climate policy. - Capacity development focus: domestic revenue mobilization, public financial management, public debt management, inflation targeting, financial sector regulation and supervision, and macroeconomic and financial statistics. - Political economy and communications: IMF viewed negatively in parts of public debate; recommended strong communication, engagement with civil society and “third party validators,” and emphasis on sequencing and protections for the vulnerable. - Risks to engagement: limited traction of policy advice, reform fatigue, low data quality, and weak coordination among development partners; mitigation measures include prioritizing communication, building networks, and grounding advice in analytical work. *Source: IMF staff report chapter "1. Reform Journey Since 2023" and accompanying annexes as provided in the supplied PDF content unit.* ### 1. Reform Journey Since 2023 ______________________________________________________________________4 ### 1. Reform Journey Since 2023 ### Context - Sustained reforms since 2023 have strengthened Nigeria’s resilience to shocks, including: - Liberalizing and strengthening the functioning of the foreign exchange market. - Removing fuel subsidies. - Ending monetary financing. - Improved revenue administration and stepped up security around critical oil infrastructure and farmland. - Outcomes highlighted: - Naira become more stable and portfolio inflows returned. - Nigeria tapped external financial markets in late 2024 and achieved a credit rating upgrade in April 2025. - Persistent challenges: poverty remains high, estimated at 46 percent in 2024, with 31 million Nigerians deemed food insecure. - Official development assistance (ODA): - Nigeria received $1.5 billion of bilateral ODA in 2023 (0.4 percent of GDP), of which $1 billion from the United States and $0.3 billion from the European Union. - Political and social context: - Government halfway through its term focused on raising growth amid opposition to specific policy initiatives (e.g., VAT distribution changes and VAT rate hike halted). - Public discontent tied to cost-of-living pressures, including higher telecom and electricity tariffs. - Insecurity remains a constraint. ### Recent Economic Developments - Growth and inflation: - GDP growth: 3.4 percent in 2024, driven mainly by hydrocarbon output and services. - Per-capita growth: around 1.3 percent. - Hydrocarbon GDP growth: 5.5 percent in 2024. - Non-hydrocarbon GDP growth: 3.3 percent in 2024. - Annual average inflation: surged to 31 percent in 2024. - Inflation: 24 percent year-on-year in 2025Q1. - Social protection: - Cash transfer system reached 5½ out of 15 million targeted households as of March 2025; each received up to 3 transfers of naira 25,000. - Fiscal performance (2024): - Consolidated government deficit (below the line): improved to 4.1 percent of GDP in 2024, from 4.8 percent of GDP in 2023. - Two-thirds of net fiscal financing needs met externally, including a $2.2 billion Eurobond issuance and World Bank support. - Government retired a third of outstanding central bank “ways and means” financing through additional issuance and securitization. - Fiscal data subject to frequent and large revisions. - External sector and reserves: - Current account surplus: increased to 9 percent of GDP in 2024. - Gross international reserves (GIR): $40 billion at end-2024, up from $33 billion at end-2023. - Net international reserves (NIR): $23 billion at end-2024. - Exchange rate: depreciated by 4 percent year to mid-May 2025 amid intensifying global headwinds. - Banking sector indicators (end-2024): - Capital adequacy: 15.3 percent at end-2024, up from 13.3 percent in 2023. - Liquidity ratio: 49 percent at end-2024 (regulatory minimum 30 percent). - Return on assets: 3.5 percent. - Non-performing loans (NPLs) ratio: 4.5 percent (does not include banks in liquidation). - Bank supervisory actions in 2024: CBN revoked one license and placed three banks under a special supervisory regime for not meeting minimum capital. ### Outlook and Risks - Scenario framework: - Baseline scenario aligns with the “post-April 9” WEO scenario (90-day pause in U.S. tariffs), with oil prices still lower than Nigeria’s 2025 budget assumption. - Adverse scenario: resurgence of global uncertainty and further downward pressure on oil prices. - Upside scenario: improvement in global risk sentiment, oil prices, and stepped-up domestic reform momentum. - Baseline projections: - GDP growth projected at 3.4 percent in 2025, stabilizing around 3½ percent over the medium-term. - Per-capita growth in baseline: about 1.3 percent. - Current account surplus projected to decline gradually as imports rise and oil prices remain lower. - Capital inflows expected to recover in the medium-term, bringing GIR to $46 billion by 2030. - New refinery expected to boost growth by 1½ percent in 2025. - Key downside risks (Annex V): - Hydrocarbon receipts vulnerable to price volatility and security conditions; prolonged/sharp decline in oil prices and/or deterioration in security would erode exports and fiscal revenues, dampen growth, fuel exchange rate pressures, and could trigger oil-pledged contingent liabilities or loss of market access. - Deterioration in global risk appetite and tighter financing conditions would limit external funding access and raise borrowing costs, undermining fiscal sustainability. - Climate shocks affecting agriculture and infrastructure and/or deterioration in security could worsen food insecurity and increase fiscal pressures. - Delayed and/or uncoordinated policy response and increased popular resistance to reforms could complicate macroeconomic policies in the run-up to general elections. - Adverse scenario implications (Annex VI): - Heightened global uncertainty depresses risk appetite and oil and gas prices, weakening fiscal and external positions and potentially prompting portfolio repatriation pressures on reserves and the naira, with residents seeking safe havens in U.S. dollars or crypto assets. Poverty and food insecurity would further deteriorate. - Upside scenario conditions: - Recovery in hydrocarbon prices and financing costs returning to pre-April levels, combined with stepped-up domestic reforms (improved business environment, security, revenue mobilization), could provide space to accelerate development spending and support inclusive growth. - Authorities’ views: - Authorities share staff’s assessment of external headwinds but are more optimistic on short-run hydrocarbon production improvement and see upsides in agriculture from better security and extension services. ### Policy Discussions and Priorities - Overall policy stance: - In the baseline, macroeconomic policies should remain tight while prioritizing growth-enhancing investment and support to the most vulnerable households. - In an adverse scenario, further adjustment would be needed to offset permanently lower hydrocarbon revenues, increasing the importance of spending quality. - In an upside scenario, faster revenue mobilization or favorable external conditions can provide space to accelerate development spending. - Key policy priorities and reforms highlighted in the Country Engagement Strategy (Annex I): - Near-term: improving security and scaling up social safety nets. - Medium-to-long term: strengthening human capital, institutions, infrastructure, and economic diversification. - Significant capacity constraints necessitate careful prioritization. - Implementation status of past Fund policy advice (Text Table 1 highlights): - Macroeconomic policies tightened in 2024. - Cash transfers: 5½ out of 15 million households enrolled as of March 2025; up to 3 transfers of naira 25,000 each. - CBN developing roadmap to adopt inflation targeting with Fund CD; CBN developed an FXI framework with Fund support. - Comprehensive set of tax reform bills to modernize VAT and company income tax laws approved by parliament. - Implicit fuel subsidies abolished in October 2024; full savings yet to accrue to the budget. - Electricity tariffs adjusted upward by 300 percent in April 2024 for Band A consumers (>20 hours/day). - Progress on AML/CFT deficiencies to exit FATF “grey list.” - Communication and data: - Effective communication is essential amid elevated uncertainty. - Strengthening the quality of macroeconomic statistics will help inform timely assessment and policy decisions. *Source: IMF staff report chapter "1. Reform Journey Since 2023".* ### 16. Absent policy actions, the fiscal deficit in 2025 would exceed budget expectations. The ### 16. Absent policy actions, the fiscal deficit in 2025 would exceed budget expectations. ### Fiscal outlook and staff baseline - The 2025 budget was based on optimistic hydrocarbon revenue projections and did not account for the price decline since April; budget includes allocations of $200 million to partially offset $440 million cuts in USAID disbursements to the health sector. - Staff projects a consolidated fiscal deficit of 4.7 percent of GDP in 2025 (Figure 9); this is higher than the budget owing to lower oil prices and production and already reflects lower-than-budgeted capital expenditure. - The baseline does not yet factor in gains from the fuel subsidy removal; discussions on the removal are ongoing. - Staff’s baseline implies an expansionary fiscal stance in 2025 relative to 2024, driven by the wage bill, transfers and capital expenditures. ### Policy recommendation on fiscal stance and expenditure prioritization - Staff recommends a neutral fiscal stance in 2025 to safeguard macroeconomic stabilization while prioritizing growth-enhancing investment and support to the most vulnerable. - Ensuring that the fuel subsidy savings accrue to the government would yield the proposed neutral stance—the full-year savings are estimated at 2 percent of GDP. - If fuel subsidy savings are not realized starting H2-2025 and tax reforms are not expected to deliver significant 2025 revenue gains, adjustment would have to come from the expenditure side (0.6 percent of GDP), with staff recommending: - Prioritize adjustments to recurrent spending to protect growth-enhancing investments. - Accelerate delivery of cash transfers to assist the poor under the cash transfer program. - Rationalize capital expenditures to preserve critical projects with the highest contribution to growth and job creation. - In the adverse scenario, further adjustment will be needed while seeking opportunities to advance or pre-commit to revenue mobilization measures to create fiscal space while safeguarding debt sustainability. ### Revenue mobilization and reform prospects - Nigeria continues to have one of the lowest revenue collection ratios in the world despite recent improvements. - Tax reform bills approved by parliament will modernize the VAT and CIT systems to improve compliance and facilitate enforcement; authorities see significant medium-term revenue potential once finalized and implemented. - The decision not to raise the VAT rate now will reduce consolidated government revenue by up to ½ percent of GDP in the authorities’ estimates; the federal government impact is minimal as VAT loss is offset by a CIT gain, but the loss falls on state and local governments. - Pre-committing to an implementation timeline in an updated medium-term framework would support fiscal sustainability and provide guidance on fiscal space. - IMF CD is supporting the authorities’ revenue reform agenda, including with a resident advisor. - Authorities’ estimate of potential revenue gains (cumulative after full implementation): - Potential revenue gains from permanent measures: 4.2 (Percent of GDP) - VAT reforms (incl. VAT on fuel products, and fiscalization/e-invoicing): 1.2 - CIT reforms (incl. top up tax on MNEs, rationalization of incentives, and capital gains tax reform): 1.0 - Excise reforms (incl. on telecom, gaming, lotteries): 0.1 - Other tax policy and administrative reforms (incl. using data and cross-validation for improving compliance): 1.8 - Potential revenue gains from one-off measures (incl. windfall tax and voluntary disclosure program): 1.9 ### Financing strategy and public debt dynamics - Envisaged 2025 financing mix is aligned with the medium-term debt strategy: a 55-45 percent mix of domestic and external instruments, and lengthening maturities as interest rates decline. - With staff’s deficit projection, legal limits for domestic and external issuance would not cover 2025 financing needs; authorities still have $1.1 billion space under the 2024 authorization to issue domestic fx securities. - The government is exploring other finance sources, including PPPs, privatization, and pre-export financing; it can also tap deposits at the CBN built over the last year (the CBN would need to internalize this liquidity injection when calibrating monetary policy). - Public debt rose to 53 percent of GDP in 2024 from 49 percent of GDP in 2023, driven by the fiscal deficit and exchange rate depreciation. - Reforms, improved external position and domestic refinery production should support growth and contain inflation in the baseline, putting debt on a downward path from 52 percent of GDP in 2025. - Government arrears to NNPCL, electricity companies and pensioners—once consolidated and recognized—will add to debt; any pre-export financing deal would reduce future revenues. - Risks to debt sustainability include worsening sentiment or oil prices, weak revenue mobilization, or expenditure slippages in the run-up to elections. - Interest costs take up a high share of revenue and there is insufficient space to scale up development and social spending to support growth (Figure 10). ### Budget process and public investment management - The budget systematically relies on overly optimistic revenue assumptions, frequently leading to intra-year revisions of capital expenditure. - Staff encourages the authorities to enhance the accuracy of fiscal forecasting with the 2026 budget, integrate the development agenda as the main budget narrative, conduct expenditure reviews, and evaluate public investment management to enhance public investment efficiency. - Fiscal data quality is weak; a committee has been set up to harmonize fiscal data across fiscal agencies. Fund CD provided a first diagnosis of challenges in fiscal reform communication. ### Authorities’ fiscal view - Authorities are confident that increased oil production and in-year adjustments will compensate for lower oil prices in 2025. - They stressed resolve to bring fuel subsidy removal savings to the budget, continue domestic revenue mobilization, diversify financing sources, and rely more on private sector involvement in infrastructure delivery. ### Monetary policy, disinflation and CBN actions - The CBN tightened monetary policy: the Monetary Policy Committee hiked its policy rate by 875 bps in 2024 and stayed on hold in February and May 2025; ex-post and ex ante policy rates are now positive in real terms. - The CBN widened the asymmetric corridor, increased the cash reserve requirement to 50 percent and issued OMOs to manage liquidity. - Tightening has incentivized fx inflows and supported fx market stability; transmission through the credit channel remains limited given the low credit-to-GDP ratio. - Staff recommends the CBN maintain a tight stance given still high inflation and external pressures; a data dependent approach remains appropriate. - Announcing a disinflation path could help anchor inflation expectations and facilitate transition to an inflation targeting regime; a neutral fiscal policy stance in 2025 would complement monetary policy and allow reducing the nominal policy rate while keeping the real policy rate positive. - The CBN is transitioning to inflation targeting; the Fund will provide CD for moving to an interest-based monetary policy framework, strengthening analytical toolkit, improving communication and enhancing local currency bond markets. - The 2007 CBN Act needs modernization, in line with the 2021 Safeguards Assessment, to enshrine primacy of price stability and strengthen CBN autonomy and governance arrangements. ### External position, FX interventions and capital flow considerations - Nigeria’s external position at end-2024 is assessed as moderately stronger than the level implied by fundamentals and desirable policies. - The outflow of some $2 billion in portfolio investments through April with limited CBN interventions demonstrated fx market functioning under stress and resilience. - Positioning of nonresident portfolio investors in OMOs (and to a lesser extent in treasury bills) exposes Nigeria to rollover risks during heightened uncertainty. - A sharp fall in oil prices or global uncertainty could trigger portfolio outflows, pressure reserves and induce steep exchange rate depreciation; in such circumstances temporary capital flow measures (CFMs) may be warranted as part of a broader policy package and consistent with the Fund’s Institutional View. - Recent fx market reforms (Electronic Foreign Exchange Matching System and FX Code) have supported price discovery and liquidity; a robust FX intervention (FXI) framework is needed to focus FXIs on containing excess volatility. - The exchange rate should continue to act as a shock absorber; temporary FXIs can complement policies in mitigating large confidence swings, but should not substitute warranted macroeconomic adjustments. Strong communication is key. ### Current CFMs and sequencing advice - Authorities maintain several outflow CFMs, including: - Ban of fx purchases on the Nigeria fx market for the purpose of investing in fx securities abroad. - Payment limits on naira-denominated credit and debit cards for overseas transactions. - Requirement for International Oil Companies to hold 50 percent of repatriated export proceeds in Nigeria for 90 days before transferring offshore with prior CBN approval. - Current fx NOP limits for banks are 20 percent for short and 0 percent for long positions; staff recommend reintroducing symmetric NOP limits and increasing them stepwise as fx pressures abate. - Phasing out CFMs should be timed and sequenced, considering external vulnerability risks and institutional and financial development progress, consistent with the IMF’s Institutional View. ### Financial sector resilience and credit - Staff welcome actions to strengthen the banking sector; large exposures to fx loans, the hydrocarbon sector and single borrowers are risks for institutions. - Banks have raised half of the required capital to meet new minimum capital thresholds effective March 2026; recapitalization will enhance lending capacity and loss absorption. - The CBN conducts monthly stress tests and plans to apply Basel III standards in 2026; authorities intend to phase out remaining Covid regulatory forbearance by June 2025. - Staff encourage improved NPL reporting and recognition of impaired loans; Fund CD suggests some banks delayed NPL recognition by granting bullet loans. - CBN decision to enforce stricter insider-lending limits within 6 months is welcomed; need to strengthen governance frameworks to protect credit quality. - A sound regulatory regime for new mortgage and consumer lending schemes is needed to prevent excessive risk taking; non-bank financial institutions (largely microfinance institutions) need to address substantial increases in NPLs and enhance lending and credit risk management standards. - Credit extension leaves the private sector underserved: private sector credit remains weak, concentrated in oil and gas, with virtually no new lending to SMEs and households. - Strengthening creditor rights, expediting judicial resolution of commercial disputes and streamlining loan recovery would boost private sector credit. *Source: IMF staff report extract (chapter section provided).* ### 35. Fast-growing fintech and crypto sectors require robust risk-based supervision. Fintech ### Fast-growing fintech and crypto sectors require robust risk-based supervision ### Fintech and crypto: access, risks, and supervision - Fintech helped improve access to financial services and enhance inclusion—74 percent of adults had access to financial services in 2024. - Rapid fintech and crypto growth poses fraud and other risks that require regulation and enforcement. - Nigeria has pioneered crypto regulations (for example, licensing requirements for crypto exchanges and the application of AML/CFT obligations on crypto asset service providers), but enforcement has not been steady. - Some unlicensed crypto exchanges continue to operate in Nigeria due to enforcement challenges, as many lack a physical presence or are based overseas. - The CBN plans to issue upgraded licensing requirements for fintech firms. - High NPLs in several NBFIs, new mortgage and consumer lending schemes, and fast-growing Fintech and crypto sectors pose potential risks to financial stability. - Regular monthly stress tests and strengthening regulations and supervision are important. ### AML/CFT and financial integrity - Authorities have undertaken measures to strengthen the effectiveness of their AML/CFT framework, in line with Nigeria’s FATF action plan, including by enhancing AML/CFT risk-based supervision and improving investigations and prosecutions of money laundering and terrorism financing. - Resolving remaining AML/CFT weaknesses and sustaining reform momentum is essential to achieve de-listing by the FATF and promote Nigeria as a trusted destination for business. - Authorities are confident that FATF delisting will be achieved soon. ### Growth, governance, and structural priorities - Near-term reforms should target priority sectors for growth and job creation; enhancing security is key for hydrocarbon and agriculture production. - Cutting red tape in trade—such as cumbersome procedures for exports/imports and ending the Pre-Shipment Inspection (PSI) of non-oil exports—would help make the most of the newly introduced National Single Window. - Authorities announced an initiative (“Nigeria First”) to prioritize locally-produced goods and services by public procurements to stimulate domestic production and strengthen fiscal multipliers. - Supporting longer-term growth requires a productivity-led push: improve agricultural productivity (mechanization, value chains, R&D), develop infrastructure, accelerate electricity sector reforms, increase spending in education and health, facilitate access to financing, and narrow macrocritical gender gaps. - Addressing multifaceted governance challenges (as identified in Annex X of the 2024 Article IV Report) would unlock growth potential; Annex II documents progress on staff’s recommendations. - Prioritizing measures that alleviate the adjustment-growth trade-off in the near term can pave the way for inclusive growth acceleration over the medium term. ### Climate risks and macro-financial implications - Climate events significantly impact Nigeria's growth outlook, fiscal sustainability, balance of payments and financial sector, potentially undermining macroeconomic stability. - Extreme weather events and their frequency have a direct effect on growth and the balance of payments. - Expected sea level rise would pose significant economic cost for Nigeria, damaging infrastructure in coastal areas such as Lagos—the main commercial and financial center. - The financial sector, while relatively small, is exposed to spillovers to asset quality and may be directly impacted via its physical presence in Lagos. - Fiscal policy will need to address lower tax revenues from lower growth and higher demands for spending on disaster relief, infrastructure repair, and investments in climate adaptation and mitigation, raising debt risk and fiscal and external financing gaps. - Authorities point to the ongoing update of their climate strategy and efforts to access climate financing. ### Macroeconomic policy stance and reform recommendations - Staff appraisal: authorities implemented bold reforms—liberalizing and strengthening the foreign exchange market, removing fuel subsidies, ending monetary financing, strengthening revenue administration, and raising hydrocarbon production—which improved macroeconomic stability. - A changing global environment (lower oil prices, heightened uncertainty) poses headwinds; elevated downside risks could produce an adverse scenario requiring further adjustment, while additional hydrocarbon production gains could provide an upside. - A recalibration of the 2025 budget and the medium-term expenditure framework is needed to adjust to lower oil prices and tighter financing conditions. - A neutral fiscal stance in 2025 is appropriate to maintain fiscal sustainability and support monetary policy. - Clearly identified measures should prioritize and protect critical investments, while scaling up cash transfers to protect the most vulnerable. - Sustaining revenue mobilization and enhancing public investment efficiency are essential to generate fiscal space and mitigate sovereign stress. - Staff welcomes adoption of the four tax reform bills that will modernize Nigeria’s tax system, incentivizing compliance and enhancing enforcement. - Bringing fuel subsidy savings on budget, and, over time as the cost-of-living crisis eases, taking further tax policy measures is needed to create fiscal space. - Enhancing the budget process, expenditure reviews and a public investment management evaluation would improve spending efficiency. - With planned use of PPPs and pre-export financing, enhanced fiscal risk analysis is needed. - The CBN is appropriately maintaining a tight monetary policy stance. - A positive real policy rate will help guide inflation down, including by easing pressures on the exchange rate with its high pass-through to domestic prices. - Announcing a disinflation path could help anchor inflation expectations and facilitate the transition to an inflation targeting regime. - External sector: - Nigeria’s external position at end-2024 is assessed to be moderately stronger than the level implied by fundamentals and desirable policies. - Managing external rollover needs has become more important with heightened external uncertainty. - Staff recommend eliminating the remaining legacy exchange restrictions, for which approval is not being sought, as conditions permit. - Reforms to improve the business environment and attract FDI would further strengthen external resilience over time. - In line with the IMF’s Integrated Policy Framework, the exchange rate should continue to play its role as shock absorber; temporary FXIs can help mitigate confidence swings and pass-through to inflation, but a robust FXI framework is needed. ### Financial sector resilience and reforms - The financial system remains resilient, with pockets of vulnerabilities. - Adoption of Basel III in 2026 and the ongoing recapitalization program will strengthen banks. - Addressing structural impediments to private credit extension would support growth. - Regular monthly stress tests and strengthened regulations and supervision are important given fast-growing fintech and crypto activity. ### Data and statistical gaps affecting surveillance - Data shortcomings hamper surveillance (Annex IX): - Inconsistency of fiscal data across government entities and limited coverage and granularity hamper accurate and timely assessment of the fiscal position. - Large errors and omissions, and delays in publishing balance of payments data, complicate external stability analysis. - Delays in publishing financial soundness indicators constrain assessment of financial conditions and risks. - Complete publication of the rebased CPI data has been delayed and setting December as the index reference period rather than using an annual index reference period inhibits assessment of the inflation level and trend. *International Monetary Fund* ### 52. Staff recommends the standard 12-month cycle for the next Article IV Consultations. ### Staff recommends the standard 12-month cycle for the next Article IV Consultations. ### Macroeconomic outlook - Real GDP (at 2010 market prices), annual: 2021: 3.6; 2022: 3.3; 2023: 2.9; 2024 (Est.): 3.4; 2025 (Proj.): 3.4; 2026 (Proj.): 3.2; 2027 (Proj.): 3.3; 2028 (Proj.): 3.3; 2029 (Proj.): 3.5; 2030 (Proj.): 3.5 - Oil and Gas GDP, annual: 2021: -8.3; 2022: -19.2; 2023: -2.2; 2024 (Est.): 5.5; 2025 (Proj.): 4.9; 2026 (Proj.): 2.3; 2027 (Proj.): 1.6; 2028 (Proj.): 0.0; 2029 (Proj.): 0.0; 2030 (Proj.): 0.0 - Non-oil GDP, annual: 2021: 4.7; 2022: 5.0; 2023: 3.2; 2024 (Est.): 3.3; 2025 (Proj.): 3.3; 2026 (Proj.): 3.3; 2027 (Proj.): 3.4; 2028 (Proj.): 3.5; 2029 (Proj.): 3.7; 2030 (Proj.): 3.7 - Production of crude oil (million barrels per day): 2021: 1.5; 2022: 1.4; 2023: 1.5; 2024 (Est.): 1.5; 2025–2030 (Proj.): 1.7 (each year) - Nominal GDP at market prices (trillions of naira): 2021: 176.1; 2022: 202.2; 2023: 347.7; 2024 (Est.): 320.3; 2025 (Proj.): 367.4; 2026 (Proj.): 422.2; 2027 (Proj.): 483.5; 2028 (Proj.): 552.6; 2029 (Proj.): 629.0 - Nominal GDP per capita (US$): 2021: 2,018; 2022: 2,135; 2023: 1,597; 2024 (Est.): 806; 2025 (Proj.): 836; 2026 (Proj.): 887; 2027 (Proj.): 948; 2028 (Proj.): 1,007; 2029 (Proj.): 1,080; 2030 (Proj.): 1,152 - GDP deflator, annual: 2021: 10.1; 2022: 11.3; 2023: 12.6; 2024 (Est.): 14.5; 2025 (Proj.): 11.4; 2026 (Proj.): 11.4; 2027 (Proj.): 11.2; 2028 (Proj.): 10.8; 2029 (Proj.): 10.4; 2030 (Proj.): 10.0 ### Inflation - Consumer price index (annual average): 2021: 17.0; 2022: 18.8; 2023: 24.7; 2024 (Est.): 31.4; 2025 (Proj.): 24.0; 2026 (Proj.): 23.0; 2027 (Proj.): 17.0; 2028 (Proj.): 15.0; 2029 (Proj.): 12.0; 2030 (Proj.): 10.0 - Consumer price index (end of period): 2021: 15.6; 2022: 21.3; 2023: 28.9; 2024 (Est.): 15.4; 2025 (Proj.): 23.0; 2026 (Proj.): 18.0; 2027 (Proj.): 16.0; 2028 (Proj.): 14.0; 2029 (Proj.): 10.0; 2030 (Proj.): 10.0 - Note: "CPI projections are derived based on rebased CPI data starting January 2025 and staff estimates." ### Investment, savings, and public debt - Gross national savings (percent of GDP): 2021: 32.4; 2022: 33.0; 2023: 31.8; 2024 (Est.): 39.6; 2025 (Proj.): 37.5; 2026 (Proj.): 37.7; 2027 (Proj.): 37.6; 2028 (Proj.): 38.5; 2029 (Proj.): 39.2; 2030 (Proj.): 39.0 - Investment (percent of GDP): 2021: 33.1; 2022: 32.2; 2023: 30.0; 2024 (Est.): 30.4; 2025 (Proj.): 30.5; 2026 (Proj.): 33.1; 2027 (Proj.): 33.9; 2028 (Proj.): 35.7; 2029 (Proj.): 37.3; 2030 (Proj.): 38.1 - Public gross debt (percent of GDP): 2021: 36.8; 2022: 40.4; 2023: 48.7; 2024 (Est.): 52.9; 2025 (Proj.): 52.0; 2026 (Proj.): 50.8; 2027 (Proj.): 49.9; 2028 (Proj.): 48.3; 2029 (Proj.): 47.2; 2030 (Proj.): 46.2 - Of which: FX denominated debt (percent of GDP): 2021: 10.1; 2022: 10.2; 2023: 18.1; 2024 (Est.): 25.5; 2025 (Proj.): 25.8; 2026 (Proj.): 24.8; 2027 (Proj.): 24.2; 2028 (Proj.): 22.8; 2029 (Proj.): 21.8; 2030 (Proj.): 20.7 - FGN interest payments (percent of FGN revenue): 2021: 79.5; 2022: 61.2; 2023: 83.8; 2024 (Est.): 41.1; 2025 (Proj.): 47.3; 2026 (Proj.): 49.2; 2027 (Proj.): 50.2; 2028 (Proj.): 53.3; 2029 (Proj.): 56.1; 2030 (Proj.): 58.0 ### Fiscal stance and government operations - Consolidated government total revenues and grants (percent of GDP): 2021: 7.1; 2022: 9.0; 2023: 9.8; 2024 (Est.): 14.4; 2025 (Proj.): 14.2; 2026 (Proj.): 13.8; 2027 (Proj.): 14.1; 2028 (Proj.): 14.0; 2029 (Proj.): 13.8; 2030 (Proj.): 13.8 - Total expenditure and net lending (percent of GDP): 2021: 12.6; 2022: 14.4; 2023: 13.9; 2024 (Est.): 17.1; 2025 (Proj.): 18.9; 2026 (Proj.): 18.7; 2027 (Proj.): 18.1; 2028 (Proj.): 17.9; 2029 (Proj.): 17.7; 2030 (Proj.): 17.7 - Overall balance (percent of GDP): 2021: -5.5; 2022: -5.4; 2023: -4.2; 2024 (Est.): -2.6; 2025 (Proj.): -4.7; 2026 (Proj.): -4.9; 2027 (Proj.): -4.0; 2028 (Proj.): -3.9; 2029 (Proj.): -4.0; 2030 (Proj.): -3.9 - Non-oil primary balance (percent of GDP): 2021: -6.0; 2022: -8.2; 2023: -4.9; 2024 (Est.): -4.9; 2025 (Proj.): -7.2; 2026 (Proj.): -6.9; 2027 (Proj.): -5.8; 2028 (Proj.): -5.1; 2029 (Proj.): -4.6; 2030 (Proj.): -4.3 ### External sector and reserves - Current account balance (percent of GDP): 2021: -0.7; 2022: 0.7; 2023: 1.8; 2024 (Est.): 9.2; 2025 (Proj.): 7.0; 2026 (Proj.): 4.6; 2027 (Proj.): 3.7; 2028 (Proj.): 2.8; 2029 (Proj.): 1.9; 2030 (Proj.): 0.9 - Price of Nigerian oil (US$ per barrel): 2021: 70.8; 2022: 99.0; 2023: 82.3; 2024 (Act): 79.9; 2025 (Proj.): 67.7; 2026 (Proj.): 63.3; 2027 (Proj.): 63.7; 2028 (Proj.): 64.7; 2029 (Proj.): 65.6; 2030 (Proj.): 65.6 - External debt outstanding (US$ billions), selected years: 2021: 101; 2022: 106.9; 2023: 102.9; 2024 (Act): 102.2; 2025 (Proj.): 105.9; 2026 (Proj.): 110.2; 2027 (Proj.): 113.1; 2028 (Proj.): 116.7; 2029 (Proj.): 120.5; 2030 (Proj.): 124.3 - Gross international reserves (US$ billions, CBN definition): 2021: 40.5; 2022: 36.6; 2023: 33.2; 2024 (Act): 40.2; 2025 (Proj.): 36.4; 2026 (Proj.): 39.1; 2027 (Proj.): 41.1; 2028 (Proj.): 43.2; 2029 (Proj.): 44.8; 2030 (Proj.): 45.8 - Equivalent months of prospective imports of G&S: 2021: 6.3; 2022: 6.7; 2023: 5.4; 2024 (Act): 5.7; 2025 (Proj.): 7.5; 2026 (Proj.): 7.7; 2027 (Proj.): 7.6; 2028 (Proj.): 7.5; 2029 (Proj.): 7.4; 2030 (Proj.): 7.2 - Memorandum: "Based on the IMF definition of gross international reserves (para 6.64 in IMF’s Balance of Payments and International Investment Position Manual (BPM6)), GIR was $8 billion lower relative to CBN’s official gross reserves at end-2024." ### Balance of payments (selected, US$ billions) - Current account balance: 2021: -3.3; 2022: 3.5; 2023: 6.4; 2024 (Act): 17.2; 2025 (Proj.): 14.0; 2026 (Proj.): 9.9; 2027 (Proj.): 8.8; 2028 (Proj.): 7.1; 2029 (Proj.): 5.3; 2030 (Proj.): 2.9 - Exports (total): 2021: 46.9; 2022: 64.2; 2023: 55.8; 2024 (Act): 53.0; 2025 (Proj.): 49.4; 2026 (Proj.): 50.0; 2027 (Proj.): 51.0; 2028 (Proj.): 52.0; 2029 (Proj.): 52.8; 2030 (Proj.): 53.2 - Imports (total): 2021: -51.4; 2022: -58.2; 2023: -47.7; 2024 (Act): -39.8; 2025 (Proj.): -34.5; 2026 (Proj.): -37.8; 2027 (Proj.): -39.7; 2028 (Proj.): -41.8; 2029 (Proj.): -43.8; 2030 (Proj.): -45.9 - Capital and financial account balance (net): 2021: 6.7; 2022: 2.6; 2023: 15.1; 2024 (Act): -5.1; 2025 (Proj.): -17.8; 2026 (Proj.): -7.2; 2027 (Proj.): -6.8; 2028 (Proj.): -5.0; 2029 (Proj.): -3.6; 2030 (Proj.): -1.9 - Overall balance: 2021: 3.6; 2022: -3.9; 2023: -3.4; 2024 (Act): 7.0; 2025 (Proj.): -3.8; 2026 (Proj.): 2.8; 2027 (Proj.): 1.9; 2028 (Proj.): 2.1; 2029 (Proj.): 1.7; 2030 (Proj.): 1.0 ### Monetary and financial sector - Broad money (percent change; end of period): 2021: 14.2; 2022: 17.4; 2023: 51.9; 2024 (Est.): 4.2; 2025 (Proj.): 7.1; 2026 (Proj.): 9.2; 2027 (Proj.): 20.0; 2028 (Proj.): 17.9; 2029 (Proj.): 18.1; 2030 (Proj.): 17.3 - Credit to the private sector (y/y, percent): 2021: 25.9; 2022: 11.0; 2023: 53.6; 2024 (Est.): 30.1; 2025 (Proj.): 17.9; 2026 (Proj.): 18.2; 2027 (Proj.): 18.4; 2028 (Proj.): 18.5; 2029 (Proj.): 18.6; 2030 (Proj.): 18.4 - Money velocity (non-oil GDP/broad money), end period: 2021: 3.7; 2022: 3.7; 2023: 2.7; 2024 (Est.): 3.3; 2025 (Proj.): 2.2; 2026 (Proj.): 2.1; 2027 (Proj.): 2.0; 2028 (Proj.): 2.0; 2029 (Proj.): 1.9; 2030 (Proj.): 1.9 - CBN Analytical Balance Sheet (selected): Reserve money (2024 Est.): 32,673 (billions of Naira); 2025 (Proj.): 37,447; 2026 (Proj.): 45,185; 2027 (Proj.): 48,701; 2028 (Proj.): 52,168; 2029 (Proj.): 56,643; 2030 (Proj.): 64,308 - Monetary survey (broad money, billions of Naira): 2021: 44,444; 2022: 52,187; 2023: 79,252; 2024 (Est.): 113,093; 2025 (Proj.): 133,332; 2026 (Proj.): 163,113; 2027 (Proj.): 195,723; 2028 (Proj.): 230,814; 2029 (Proj.): 272,562; 2030 (Proj.): 319,732 ### Financial soundness (end-2024) - Regulatory Capital to Risk-Weighted Assets: 2024Q4: 15.3 - Non-Performing Loans to Total Gross Loans: 2024Q4: 4.9 - Return on Assets: 2024Q4: 3.5 - Liquid Assets to Total Assets (Liquid Asset Ratio): 2024Q4: 18.3 ### Fiscal aggregates in levels (selected) - Consolidated government total revenue and grants (billions of Naira): 2021: 12,462; 2022: 18,129; 2023: 22,889; 2024 (Est.): 40,081; 2025 (Proj.): 45,274; 2026 (Proj.): 50,629; 2027 (Proj.): 59,330; 2028 (Proj.): 67,467; 2029 (Proj.): 76,111; 2030 (Proj.): 86,727 - Consolidated government total expenditure (billions of Naira): 2021: 22,113; 2022: 29,102; 2023: 32,701; 2024 (Est.): 47,373; 2025 (Proj.): 60,335; 2026 (Proj.): 68,642; 2027 (Proj.): 76,308; 2028 (Proj.): 86,419; 2029 (Proj.): 97,971; 2030 (Proj.): 111,265 - Federal Government total revenue and grants (billions of Naira): 2021: 4,853; 2022: 6,454; 2023: 8,626; 2024 (Act): 9,728; 2025 (Budget): 16,739; 2026 (Est.): 19,733; 2027 (Proj.): 33,397; 2028 (Proj.): 21,928; 2029 (Proj.): 32,379; 2030 (Proj.): 24,858 ### Key policy note - Staff recommends the standard 12-month cycle for the next Article IV Consultations. *Source: IMF staff estimates and projections as presented in the Nigeria country tables and text.* ### Annex I. Country Engagement Strategy Summary ### Annex I. Country Engagement Strategy Summary ### A. Fragility in Nigeria and Policies - Historical and institutional context - Nigeria gained independence in 1960. The British colonial administration amalgamated northern and southern protectorates in 1914 and employed indirect rule, particularly in the north. - Post-independence dynamics included political crises, a civil war (1967-1970), a series of military coups and violence, and a return to democracy in 1999 (the beginning of the Fourth Republic). - Nigeria’s political system is based on a federal and presidential framework established in 1963, with significant autonomy for states and local governments. - Nature and drivers of fragility - Fragility is multidimensional, with insecurity and economic underdevelopment interacting with historical ethno-religious fragmentation. - Spillovers from regional neighbors add complexity to security challenges. - Identified drivers: ethno-religious fragmentation and regional divides; high insecurity and weak rule of law; high demographic and social pressures; economic and financial constraints; a continuous brain drain; food insecurity; climate change; poor governance and corruption. - Consequences: social exclusion and unrest in several regions, waves of internally displaced persons facing severe humanitarian and socio-economic challenges, undermined governance and trust, lack of an “elite consensus” on social and economic policy, and a fast-growing population with limited human development and economic opportunities. - Policy approach to exit fragility - Overarching priority: break the adverse feedback loop of poor socio-economic outcomes and drivers of fragility; forge a broad consensus around reforms with trust-building as a central objective. - Principles for reform: fairness and equal treatment across regions and groups; accountability; demonstrated spending quality and transparency. - Short-term priorities - Improving security conditions and scaling up social safety nets are critical. - Specific short-term actions cited: - Enhance farmers’ security and tackle oil theft to reduce food insecurity and boost fiscal space for development. - Expand the cash transfer system to cover more households and ensure continuous social support. - Medium- and long-term priorities - Strengthen human capital, institutions and infrastructure; enhance revenue mobilization; accelerate economic diversification. - Specific medium- and long-term actions cited: - Expand access to affordable healthcare, improve education quality, and promote technical and vocational training. - Improve economic opportunities for women. - Improve digital infrastructure and literacy. - Public and private investment in electricity and transport to reduce infrastructure gaps and boost competitiveness. - Implement well-designed tax policy and administration reforms. - Strengthen governance and transparency in the hydrocarbon industry. - Strengthen trade and competition policies, eliminate business barriers to SMEs, and maintain the now flexible exchange rate to support non-oil export competitiveness. - Reforms in agriculture and investments in manufacturing to drive growth and job creation. ### B. Fund Engagement and Risks - IMF engagement channels and past assistance - Nigeria has access to all channels of IMF support. - The IMF prepares an annual Article IV report on Nigeria and engages in continuous policy dialogue between consultations, including through the office of the resident representative. - The IMF provides capacity development through country visits and resident experts. - Nigeria has not requested financial assistance through an IMF lending facility; Nigeria accessed the rapid financing instrument facility during the Covid-19 crisis in 2020. - Coordination with development partners - The IMF will continue to collaborate and coordinate on the ground and at headquarters with development partners, in particular the World Bank. - Areas of close IMF–World Bank collaboration: domestic revenue mobilization, social spending, financial sector issues, and macroeconomic and financial statistics. - The IMF liaises closely with the World Food Program on food security and participates in Nigeria’s development partner group through the resident representative. - Surveillance and policy advice focus - IMF surveillance will focus on safeguarding macroeconomic stability, strengthening policy frameworks, the appropriate macroeconomic policy mix, and structural reforms to raise growth and foster development. - Surveillance topics to include: - Macroeconomic policies to safeguard external and price stability, including reducing inflation and enhancing the functioning of the foreign exchange market. - Strengthening domestic revenue mobilization and social safety nets. - Design of a foreign exchange intervention, inflation targeting, macro- and micro-prudential frameworks. - Developing and regulating the crypto asset and fintech sector. - Assisting authorities to strengthen their Anti-Money Laundering / Countering the Financing of Terrorism framework to exit the Financial Action Task Force’s grey list. - Public financial management and public debt management. - Policies to address and mitigate the impact of climate change. - Policies to strengthen sustainable and inclusive growth and fiscal federalism. - Policies to strengthen governance to build trust. - Surveillance will be underpinned by analytical work. - Capacity development priorities and delivery - Focus areas: domestic revenue mobilization, public financial management, public debt management, inflation targeting, financial sector regulation and supervision, policy and reform communication, and macroeconomic and financial statistics. - Delivery modalities: headquarter missions, short-term experts from the Regional Technical Assistance Center in Ghana, and resident experts as appropriate. - Political economy and communications challenges - The IMF is viewed negatively in much of the Nigerian public debate; media narratives often portray the Fund as providing anti-people advice. - Authorities are concerned reforms associated with IMF advice may be automatically opposed. - Strong communication is therefore important to improve the IMF’s public image and build traction. - Communication tools and engagement approaches: - Leverage high-level visits, the office of the resident representative, visiting missions, and multilateral surveillance products. - Engage with civil society, academia, parliament, youth, labor unions, parliamentarians, and the media. - Identify influencers (“third party validators”) to help strengthen the IMF’s public image. - Risks to IMF engagement - Substantial risks include limited traction of policy advice, fear of reforms, reform fatigue, misconstrued or misunderstood policy advice, low data quality, failure to anticipate key risks, weak coordination among development partners, and prevailing stigma that may delay requests for IMF support. - Risk mitigation measures - Prioritize communication, build networks, and identify allies. - Emphasize that proposed reforms are well sequenced and well-calibrated to Nigeria’s fragile context and include protections for the vulnerable. - Ground advice in sound analytical work that is widely shared and informed by IMF cross-country experience. - Use capacity development to strengthen policy frameworks and build ownership and strong macroeconomic policy institutions. *International Monetary Fund — Annex I. Country Engagement Strategy Summary* ### 2023. The net services balance remains roughly flat in 2024 relative to 2023 at a deficit of close to 7 percent of ### Nigeria: External Position, Exchange Rate Developments, Dangote Refinery Impact, and Risk Assessment (2023–2026) ### Current Account, Balance of Payments, and External Position - Net services balance in 2024 remains roughly flat relative to 2023 at a deficit of close to 7 percent of GDP. - Medium-term outlook: Dangote refinery expected to stabilize the net oil balance as both exports of crude oil and imports of refined oil decline; increase in non-oil imports expected to outpace increase in non-oil goods exports, services, and remittances, narrowing the current account (CA) surplus to close to 1 percent of GDP. - Assessment of external position: - Mechanical EBA-lite quantitative models suggest external position is substantially stronger than level implied by fundamentals and desired policy settings. - After considering temporary factors (large import compression, significantly lower hydrocarbon-related repatriations, large net errors and omissions), staff assess the external position as moderately stronger than the level implied by fundamentals and desirable policies. - EBA-lite and CA model results for 2024 (in percent of GDP, as presented): - CA-Actual 9.2 - Cyclical contributions (from model) (-)0.3 - Additional temporary/statistical factors (-) 2/4.0 - Natural disasters and conflicts (-)0.6 - Adjusted CA 4.3 - CA Norm (from model) 3/-2.0 - Adjusted CA Norm -2.0 - CA Gap 6.3 5.5 - o/w Relative policy gap 3.6 - Elasticity -0.1 - REER Gap (in percent) -54.4 -47.4 - Notes: 1/ Based on the EBA-lite 3.0 methodology; 2/ Additional adjustment to account for the non-oil imports compression during 2024 (close to 2.5 percent of GDP) and one-off decline in oil sector repatriations (close to 1.5 percent of GDP); 3/ Cyclically adjusted, including multilateral consistency adjustments. ### Real and Nominal Effective Exchange Rate, and Official Naira-USD Rates - REER depreciated by 45 percent in 2024; NEER depreciated by 58 percent in 2024. - Official naira/US dollar exchange rate (annual average) depreciated by 130 percent from 645 naira/US dollar in 2023 to 1,479 naira/US dollar in 2024. - Official naira/US dollar exchange rate (end-of-period) depreciated by 71 percent from 899 naira/US dollar at end-2023 to 1,536 naira/US dollar at end-2024. - As of end-April 2025, the nominal exchange rate further depreciated to 1,597 naira/US dollar. - As of end-March 2025, REER and NEER appreciated by 9 and 1 percent, respectively, relative to end-December 2024. - Assessment: EBA-lite REER gap model indicates a REER gap of 47 percent, suggesting a REER depreciation much larger than expected for the period. Policy path: undertake consistent macroeconomic policy adjustments, continue reforms to enhance FX market functioning, and improve confidence to help close the gap. ### Capital and Financial Account Flows and Policy Measures - Financial account net inflow in 2024: $5 billion (3 percent of GDP). - Net FDI in 2024: $700 million (under 0.5 percent of GDP). - Portfolio flows increased supported by a $2.2 billion Eurobond issuance and portfolio inflows into central bank OMOs (close to $10 billion). - Other investments: large net negative outflows; outflows from other investments account rose significantly to $18 billion for end-2024, mainly due to a central bank net repayment of $11 billion and private sector net loan repayments. - Assessment: - Lower FDI inflows reflect exits of several multinational and oil companies from onshore businesses. - Significant net loan repayments from the CBN reflect gradual phasing out of short-term borrowing instruments. - Recommended reforms: diversify non-oil exports and improve business environment to support oil and gas sector growth. - Nigeria maintains several outflow capital flow management measures (CFMs) to support reserves accumulation; staff recommend phasing out CFMs in a properly timed and sequenced manner, considering external vulnerability risks and reform progress, and in line with the IMF’s Institutional View. ### FX Intervention and Reserves - Nigeria moved toward a market-based exchange rate with improving FX market functioning supported by occasional FX intervention (FXI) by the central bank. - Gross reserves (end of period) in 2024: $40 billion (21 percent of GDP in 2024), equal to 9 months of imports. - Gross reserves at end-2023: $33 billion (9 percent of GDP), close to 7 months of imports. - Increase in gross reserves in 2024 supported by central bank’s short-term borrowing in naira-denominated OMOs from non-resident investors and the Eurobond issuance. - Staff de facto exchange rate regime classification changed to ‘floating’ in 2024 from ‘other managed’ in 2023. - Uncertainty: lack of clarity on maturities of CBN’s short-term FX liabilities and swap lines, and significant increase in naira liabilities to non-resident portfolio investors in 2024, complicates gross and net reserves projections. - IMF definition adjustment: securities of around $8 billion considered pledged collateral not readily available to the CBN, reducing GIR under IMF definition to $32 billion at end-2024, still corresponding to 129 percent of the ARA metric. - Assessment: - Gross international reserves are at 161 percent of the Assessment of Reserve Adequacy (ARA) metric based on floating exchange rate regime. - Gross reserves projected to decrease in 2025, then rise thereafter and remain above the ARA metric. - Medium-term projection: projected CA surplus, slight improvements in FDI and portfolio flows, and borrowing from official and multilateral creditors, despite repayments, will help gradually raise reserves to around $46 billion in 2030. - Lack of clarity on composition of central bank’s gross reserves hinders more detailed assessment. - FXI guidance: - CBN interventions aim to ease FX liquidity pressures and support market confidence. - Recommendation: implement recently developed intervention model and governance framework; FXIs can mitigate risks associated with large confidence swings and sharp depreciation but should be temporary, not substitute for warranted macro adjustment, and be accompanied by well-coordinated communication. ### Macroeconomic Impact of the Dangote Refinery (Annex IV) - Project start and scale: - Dangote Refinery started production in January 2024. - Total investment: $20 billion (5.5 percent of 2023 GDP). - Production capacity: 650,000 barrels/day. - Product composition: Gasoline (PMS) 55 percent, Diesel (incl. Marine Diesel) 26 percent, Jet Fuel 19 percent. - Domestic coverage at full capacity: - 79 percent of gasoline production expected to meet domestic PMS demand (estimated at 45 million liters of gasoline per day); remainder exported. - 37 percent of diesel production expected to cover domestic diesel demand (estimated at 10 million liters per day); remaining 63 percent exported. - Around 85 percent of jet fuel production expected to be exported. - Diesel and jet fuel production started in January 2024; PMS produced first in September 2024 due to delays in crude allocation agreement with NNPCL. - Steady-state assumptions (Table 1): - Refinery operates at 90 percent of capacity. - Domestic crude supplies 50 percent of needed crude oil; remaining crude imported. - Market-determined exchange rates and prices used. - In steady state domestic demand for PMS, diesel, jet fuel, and polypropylene fully met domestically. - All refined products’ export receipts assumed fully repatriated; net zero impact on financial account is assumed. - Results reported in percent of 2026 projected GDP (2026 is year refinery projected to reach full capacity). - Projected impacts (Table 2, Billion USD and Percent of 2026 GDP): - Positive effect total: 18.7 (11.5 percent of 2026 GDP) - Decrease of refined fuel and Polypropylene imports: 11.4 (5.3) - Increase in refined fuel, Polypropylene, Carbon Black and Sulfur exports: 7.3 (3.4) - Negative effect total: 13.2 (6.1) - Increase in import of crude oil by Dangote: 6.6 (3.1) - Decrease in export of crude oil by NNPCL and IOCs: 6.6 (3.1) - Current account change: 5.5 (5.3) - Gross reserves change: 5.5 (5.3) - Additional steady-state parameters: - Production as Share of Capacity (%) 90 - Domestic Crude Oil Supply (% of needed crude oil) 50 - PMS domestic demand (million liters/day) 45 - Diesel domestic demand (million liters/day) 10 - Jet fuel domestic demand (million liters/day) 3 - Coverage of PMS, Diesel, Fuel Domestic and Polypropylene Demand (%) 100 - Crude Oil Price ($, 2026) 62 - Interpretation: - Net positive effect: import substitution ($11.4 billion) plus higher exports ($7.3 billion) outweigh reduced crude exports and higher crude imports (each $6.6 billion), improving CA by around $5.5 billion (2.6 percent of 2026 GDP) and raising official reserves by around $5.5 billion annually—assuming value-added and receipts are kept onshore. - Fiscal impact: direct limited fiscal impact due to FTZ location with duty-free and tax exemptions; potential indirect positive fiscal impact through growth spillovers expected to more-than-offset revenue loss from lower customs duties on PMS imports (0.2 percent of GDP). - Growth and employment: refinery triggered infrastructure development and created around 150,000 direct and indirect jobs in connected sectors; expected to increase non-oil GDP by around 1½ percent by 2026; training program has 60,000 beneficiaries so far. - Note: analysis conservative—does not model possible FDI attracted by the project. ### Risk Assessment Matrix (selected risks, likelihoods, horizons, impacts, and policy responses) - External Risks: - Trade policy and investment shocks - Likelihood: High; Time Horizon: Short Term; Impact: Medium - Policy responses: Diversify external financing (including from IFIs); prioritize fiscal intervention to relieve food insecurity; mobilize revenues; tighten monetary policy; maintain exchange rate flexibility. - Commodity price volatility - Likelihood: Medium; Time Horizon: Short Term; Impact: High - Policy responses: Prioritize fiscal intervention to relieve food insecurity and non-oil revenue-based fiscal consolidation; tighten monetary policy; maintain exchange rate flexibility. - Deepening geoeconomic fragmentation - Likelihood: High; Time Horizon: Short Term; Impact: Medium - Policy responses: Structural reforms to boost competitiveness and regional trade links; revenue mobilization; accelerate energy transition plan. - Sovereign debt distress - Likelihood: High; Time Horizon: Short to Medium Term; Impact: High - Policy responses: Tighten monetary policy; maintain flexible exchange rate and deploy Integrated Policy Framework tools; mobilize fiscal revenues. - Nigeria-specific Risks: - Negative oil price shock or reduction in oil production due to security deterioration - Likelihood: High; Time Horizon: Short to Medium Term; Impact: High - Policy responses: Decisively tighten monetary policy; tighten fiscal policy by boosting revenues and streamlining spending while protecting vulnerable; strengthen security and investment environment in oil and gas sector. - Food insecurity - Likelihood: High; Time Horizon: Short to Medium Term; Impact: High - Policy responses: Accelerate cash transfers to targeted households; strengthen agricultural sector (increase inputs supply, reduce transport losses). - Sustained inclusion in FATF “grey list” - Likelihood: Medium; Time Horizon: Short Term; Impact: Medium - Policy responses: Strengthen AML/CFT regime, implement past Fund recommendations and 2021 Mutual Evaluation Report recommendations. - Climate change risk: - Likelihood: Medium; Time Horizon: Medium to Long Term; Impact: High - Policy responses: Strengthen fiscal buffers and ex-ante risk financing instruments; expand delivery mechanisms for relief aid; integrate climate resilience into public investment management. *Italic line: Source: IMF staff report content provided in the supplied PDF content unit.* ### Annex VI. Adverse Scenario ### Annex VI. Adverse Scenario ### A. Potential Crisis Triggers - A significant deterioration in risk appetite: - Global uncertainty spikes again and portfolio investors seek safe havens and repatriate short-term positions, putting severe pressures on reserves and the naira. - Residents seek safe haven in U.S. dollars, gold, or crypto assets, leading to a self-reinforcing adverse feedback loop. - A further decline in oil and gas prices: - Heightened global uncertainty curtails global demand for commodities while some commodity producers increase supply to meet revenue targets. - Global commodity prices decline even further compared to the baseline. ### B. Impact on the Economy - Rapid naira depreciation and loss of market confidence: - Two parallel external shocks reduce Nigeria’s fx inflows and increase outflow pressures. - The CBN attempts to stem naira depreciation, but reserves, though stronger, are insufficient to meet rapidly growing fx demand. - Once a threshold of reserve losses is reached, the CBN would stop intervening, naira depreciation would accelerate and overshoot market clearing equilibrium amid complete loss of market confidence from residents and non-residents. - Residents would face difficulties accessing dollars in the official market; the parallel market premium would widen substantially and residents may turn to crypto channels, putting further pressure on the naira. - Inflationary pressures: - Naira depreciation would exacerbate inflation; year-on-year inflation would accelerate despite the fall in global oil prices as the depreciation effect dominates. - Erosion of purchasing power would hit poor and vulnerable households particularly hard; poverty and food insecurity would rise. - Domestic demand and non-oil growth would be depressed compared to the baseline. - Import compression and risks to critical supplies: - Import compression from depreciation would partially offset the trade balance and reduce the external deficit and drain on reserves. - Risk that importation of critical foods or medical supplies would be impacted, further exacerbating food insecurity and undermining critical health services. - GDP growth and labor market: - Rising uncertainty and high inflation depress consumption and investment; unemployment and underemployment rise, increasing poverty and food insecurity. - Insecurity increases as economic opportunities decline; smaller firms may exit, larger and highly leveraged corporates could run domestic or external arrears. - Planned investment in additional production capacity would be paused at low oil prices. - Financial sector pressures: - High credit concentration and large exposure to oil and gas companies worsen asset quality where clients have currency mismatches or declining fx earnings. - Banks would meet or exceed minimum capital requirements, but some smaller institutions may need resolution. - Lending standards tighten further, reducing investment scope even for large corporates. - Resolution of non-viable institutions could cause losses for large depositors above deposit insurance thresholds and strain deposit insurance in the event of multiple failures. - A significant single exposure default could put larger institutions under pressure or fail, potentially giving rise to a banking crisis. ### C. Implications for Macroeconomic Policies - Fiscal financing pressures: - Fx spending needs, particularly debt service, remain unchanged while fx revenues decline. - Inflation and depreciation boost nominal revenue collection in naira, but naira spending needs rise as the government offsets economic deterioration and shortages of staples or medicines. - Business losses and failures reduce tax revenues over time; the government may temporarily suspend customs levies or VAT on specific products to limit inflationary impact. - Higher deficit and financing needs erode debt sustainability; domestic banks remain willing to absorb issuance but maturities shorten and yields rise. - The government could be de facto shut out from external financing as widening spreads make borrowing prohibitive. - Higher domestic yields increase interest spending, pressuring expenditures and fiscal space; priority spending and fx-denominated outlays may be cut and the government may resort to CBN reserves for debt servicing, constraining support for the vulnerable and exacerbating poverty and food insecurity. - Monetary policy response: - Monetary policy would be tightened to keep the policy rate positive in real terms amid accelerating inflation and naira depreciation. - The CBN would use OMOs to mop up excess naira liquidity as part of tightening financial conditions. - OMO issuance at high yields would weigh on CBN profitability; containing liquidity injection from losses is important. ### D. Policy Response - Overarching approach: - A coherent and consistent policy and reform agenda is key to maintaining stability and restoring growth. - Short-term emergency measures must be set within a coordinated macroeconomic policy framework that generates overall confidence, particularly investor confidence. - Mobilizing external financing from development partners could be important to smooth adjustment and build confidence. - Policy objectives: - Restore external balance while maintaining fiscal sustainability together with monetary and financial stability. - Given the deterioration is considered permanent, adjustment to lower dollar inflows is required through expenditure switching and, over the long term, export diversification. - Exchange rate flexibility should be integral to adjustment while preventing large overshooting or market destabilization. - Capital flow measures: - The CBN may consider temporary outflow capital flow measures (CFMs) to support external stability in an imminent crisis or crisis situation as part of a broader policy package and in line with the IMF’s Institutional View. - Temporary CFMs should be gradually lifted once conditions for safe withdrawal are met, including necessary supporting reforms; the IMF can advise on CFM design as part of a broader package. - Fiscal framework: - A medium-term fiscal framework can anchor confidence and safeguard sustainability given the loss of external revenue. - Requires strong and credible fiscal institutions, a strong medium-term budget process, and reliable and timely fiscal data. - While immediate revenue measures may be difficult, the government can pre-commit to future measures to put revenue on a sustainable path; scope exists to grow revenues through administrative efforts and to reduce expenditure compared to the approved budget. - Securing low-cost financing, including concessional borrowing from official creditors, can help contain debt servicing costs. - Financial sector policies: - Supervision must be intensified to detect problems early and work with banks to address challenges timely. - Ensure banks provision appropriately for problem loans; non-viable institutions should be resolved promptly to limit systemic impact. - The ongoing capital increase may be paused as regulatory forbearance if investor appetite becomes muted. ### E. Policies to Mitigate Crisis Risks Ex-ante - Strengthen resilience and emergency preparedness: - Authorities can take measures now to strengthen resilience and have emergency responses ready; crisis teams at federal government level and the CBN should develop scenarios and policy responses. - Fiscal policy preparedness: - Present a credible revised 2025 budget reflecting current developments and implications for revenue and expenditure execution capacity. - Demonstrate the budget is fully financed even with tightening global financial conditions. - Explore and secure development partner support to lower average borrowing costs and create space for priority needs. - Accelerate the roll-out of the social safety net. - Monetary and exchange rate policy preparedness: - Implement the new FXI framework and determine the FXI budget. _International Monetary Fund — Annex VI. Adverse Scenario_ ### 6. Progress has been made in implementing TA recommendations, albeit at a slow pace. ### 6. Progress has been made in implementing TA recommendations, albeit at a slow pace. ### Technical Assistance (TA) implementation: status and risks - Progress on implementing TA recommendations has been made, albeit at a slow pace. - Key risk factors limiting traction: - Political commitment. - Absorptive capacity. - Technical skills. - Recommended actions to improve CD traction: - Ensure top-level buy-in. - Regularly liaise at the principal level. - Maintain close follow-up until reform delivery is completed. - Be willing to step away from CD areas where traction and reform progress are too limited. - Rely on hands-on and regular support from AFRITAC West and the resident advisor to address limited absorptive capacity. ### Sovereign risk and debt sustainability: overall assessment - Overall risk of sovereign stress: Moderate. - Staff assesses medium-term risks as high, in line with the mechanical signal of high risk. - Fan-chart module: points to high medium-term risks, driven by the width of the fan and an elevated probability of debt non-stabilization reflecting high historical volatility (global oil price fluctuations and uncertainty related to recent reforms). - GFN mechanical signal: indicates moderate medium-term risks, supported by a relatively low average GFN over the medium-term and a large potential space for domestic banks to step in if a funding shock materializes. - Weighted average of both signals: overall high medium-term risk assessment. - Triggered stress tests emphasize: - Staying the course on domestic revenue mobilization. - Building buffers. - Enhancing fiscal risk management. - Diversifying exports and fiscal revenues away from hydrocarbons to contain liquidity risks and mitigate uncertainty. ### Key recent fiscal and debt developments - Public debt developments: - Nigeria's public debt continued to rise in 2024, reaching 53 percent of GDP from 49 percent of GDP in 2023. - Drivers of the 2024 increase: the fiscal deficit and exchange rate depreciation. - Positive supporting developments: - Reforms over the last 2 years have strengthened the external position and investor confidence, stabilized the exchange rate, and improved security. - Domestic refinery ramping up production and private investment regaining momentum should support medium-term growth and put debt on a declining path in the baseline. - Risks flagged: - Worsening global sentiment or oil prices. - Still weak domestic revenue mobilization. - Potential expenditure slippages in the run-up to elections. - Government arrears to NNPCL, electricity companies and pensioners—once consolidated and recognized—will add to debt. - Any pre-export financing deal would reduce future revenues. - Absent policies to safeguard macroeconomic stability, enhance fiscal risk management and improve the fiscal position, risks would increase. - Supporting features for the moderate overall assessment: - Long maturity structure of Nigeria's debt stock. - Improvements in macroeconomic conditions: increased hydrocarbon production, improved external position, enhanced resilience, and declining inflation. ### Debt coverage, structure and market composition - Perimeter of public debt in the SRDSA includes general government debt (central government, state and local government) and the government’s CBN overdraft facility (ways and means). - Ongoing consolidation: government is undertaking consolidation of potential arrears to the national oil company, electricity companies, and pensioners; once recognized, these arrears will be included in public debt. - Debt composition and trends: - The Eurobond issuance, World Bank disbursements, and large exchange rate depreciation in 2024 brought the share of foreign debt in total debt to 48 percent, leading to a higher share of marketable and long-term debt in 2024. - Increased reliance on non-bank and medium-and long-term domestic debt—particularly pension funds’ borrowing—is expected over the medium-term per the government’s medium-term debt strategy; this increases pension funds’ exposure to the sovereign, though the long-term nature of their investment would mitigate this risk. - Residual maturity: 12.9 years. ### Baseline projection highlights (selected figures preserved from baseline table) - Public debt (Percent of GDP): Actual 2024: 52.9; 2025: 52.0; 2026: 50.8; 2027: 49.9; 2028: 48.3; 2029: 47.2; 2030: 46.2; 2031: 46.0; 2032: 45.1; 2033: 44.8; 2034: 43.9. - Change in public debt (Percent of GDP): 2024: 4.2; 2025: -0.9; 2026: -1.2; 2027: -0.9; 2028: -1.6; 2029: -1.1; 2030: -1.0; 2031: -0.3; 2032: -0.9; 2033: -0.4; 2034: -0.9. - Contribution of identified flows (Percent of GDP): 2024: 15.0; 2025: -0.1; 2026: 0.2; 2027: -0.6; 2028: -0.5; 2029: -0.4; 2030: -0.3; 2031: -0.4; 2032: -0.7; 2033: -0.5; 2034: -0.8. - Primary deficit (Percent of GDP): 2024: -0.7; 2025: 1.0; 2026: 1.3; 2027: 0.4; 2028: 0.1; 2029: 0.1; 2030: 0.0; 2031: -0.1; 2032: -0.2; 2033: -0.1; 2034: -0.2. - Noninterest revenues (Percent of GDP): 2024: 14.4; 2025: 14.2; 2026: 13.8; 2027: 14.1; 2028: 14.0; 2029: 13.8; 2030: 13.8; 2031: 13.6; 2032: 13.6; 2033: 13.5; 2034: 13.0. - Noninterest expenditures (Percent of GDP): 2024: 13.8; 2025: 15.2; 2026: 15.1; 2027: 14.5; 2028: 14.1; 2029: 13.9; 2030: 13.8; 2031: 13.5; 2032: 13.4; 2033: 13.4; 2034: 12.9. - Automatic debt dynamics (Percent of GDP): 2024: 15.5; 2025: -1.2; 2026: -1.1; 2027: -0.9; 2028: -0.7; 2029: -0.5; 2030: -0.3; 2031: -0.3; 2032: -0.4; 2033: -0.5; 2034: -0.6. - Gross financing needs (GFN, Percent of GDP): 2024: 3.5; 2025: 6.6; 2026: 6.6; 2027: 7.3; 2028: 7.4; 2029: 7.4; 2030: 7.4; 2031: 7.6; 2032: 7.7; 2033: 7.3; 2034: 7.2. - Of which: debt service (Percent of GDP): 2024: 4.2; 2025: 5.5; 2026: 5.3; 2027: 6.9; 2028: 7.3; 2029: 7.3; 2030: 7.3; 2031: 7.4; 2032: 7.7; 2033: 9.7; 2034: 7.4. - Local currency (Percent of GDP): 2024: 2.7; 2025: 2.8; 2026: 3.7; 2027: 4.6; 2028: 5.2; 2029: 5.4; 2030: 5.6; 2031: 5.8; 2032: 6.1; 2033: 5.6; 2034: 5.4. - Foreign currency (Percent of GDP): 2024: 1.5; 2025: 2.7; 2026: 1.7; 2027: 2.3; 2028: 2.1; 2029: 1.9; 2030: 1.8; 2031: 2.0; 2032: 1.9; 2033: 1.7; 2034: 2.0. - Memo: - Real GDP growth (percent): 2024: 3.4; 2025: 3.4; 2026: 3.2; 2027: 3.3; 2028: 3.3; 2029: 3.5; 2030: 3.5; 2031: 3.5; 2032: 3.5; 2033: 3.5. - Inflation (GDP deflator; percent): 2024: 14.5; 2025: 11.4; 2026: 11.4; 2027: 11.2; 2028: 10.8; 2029: 10.4; 2030: 10.0; 2031: 10.2; 2032: 10.2; 2033: 10.2; 2034: 10.0. - Nominal GDP growth (percent): 2024: 18.4; 2025: 15.2; 2026: 15.0; 2027: 14.8; 2028: 14.5; 2029: 14.3; 2030: 13.9; 2031: 14.1; 2032: 14.1; 2033: 14.1; 2034: 13.8. - Effective interest rate (percent): 2024: 8.1; 2025: 8.0; 2026: 8.0; 2027: 8.2; 2028: 8.7; 2029: 9.2; 2030: 9.5; 2031: 9.6; 2032: 9.5; 2033: 9.3; 2034: 8.8. ### Medium-term risk module outputs and diagnostics - Debt fanchart module: - Fanchart width: 80.9 1.2 - Probability of debt non-stabilization (percent): 78.6 0.7 - Terminal debt-to-GDP x39.5 0.9 - Debt Fanchart Index (DFI): 2.7 - Risk Signal: High - Gross Financing Needs (GFN) module: - Average baseline GFN 7.1 2.4 - Initial Banks' claims on the gen. govt (pct bank assets): 13.5 4.4 - Chg. In banks' claims in stress (pct banks' assets): 14.5 4.9 - GFN Financeability Index (GFI): 11.7 - Risk Signal: Moderate - Medium-term Index (weighted final assessment): - Final Assessment: Prob. of missed crisis, 2025-2030, if stress not predicted: 54.5 pct. - Prob. of false alarms, 2025-2030, if stress predicted: 9.1 pct. - Final Assessment: High (medium-term risk signal: High) - Interpretation: The fanchart module indicates a high level of risk of sovereign stress because of uncertainty around the baseline and probability of debt non-stabilization; the GFN module indicates a moderate liquidity risk but a worse GFN score than 2024 AIV DSA due to deteriorating primary balance and large maturities over the medium-term. The final mechanical assessment (weighted average) points to a high medium-term risk from a previous moderate assessment. ### Long-term and scenario analyses - Long-term assessment (moderate): Staff assesses long-term risks as moderate overall, but: - Under the three considered alternatives, risks related to large amortization are high. - Scaling up private investment, addressing security challenges and increasing domestic revenues would help mitigate these risks. - Based on updated estimates of adaptation costs and growth gains for Nigeria, risks from climate adaptation are low. - Risks from natural resource depletion highlight the need for economic diversification over time. - Long-term scenario outputs: - The long-term risk assessment indicates high risks from large amortization under all considered alternatives. - GFN and debt stabilize in the “medium-term extrapolation with debt stabilizing primary balance" scenario and the “customized" scenario (customized broadly corresponds to an active scenario with domestic revenue mobilization measures that involve rate increases). - Results underscore the importance of staying the course on revenue mobilization reforms. - Climate adaptation scenarios: - In a customized climate adaptation scenario using estimates of adaptation costs and growth gains for Nigeria, the debt trajectory could be slightly improved relative to the baseline. - The "standardized scenario" using standardized cost estimates follows closely the baseline. - Natural resources scenario: - In the absence of new discoveries, an exhaustion of hydrocarbon production would lead to lower oil revenues, exports and GDP, potentially yielding higher GFN, a higher debt path and lower buffers. - These simulations highlight the importance of the authorities' growth agenda to diversify exports and fiscal revenues, though hydrocarbon exports and revenues remain important for the foreseeable future. *Source: Fund staff.* ### Annex IX. Data Issues ### Annex IX. Data Issues ### Data Adequacy Assessment (Table 1) - Median Rating: CCCCCBC - Data Adequacy Assessment Rating 1/: C - Questionnaire Results 2/: Coverage CCDBB; Consistency CD; Frequency and Timeliness ABABC - Data Quality Characteristics — Granularity 3/: Detailed cells show mixed assessments across sectors (see Table 1). - Overall statements included in the assessment: - "The data provided to the Fund have some shortcomings that somewhat hamper surveillance." - "The data provided to the Fund have serious shortcomings that significantly hamper surveillance." - "The data provided to the Fund are adequate for surveillance." - "The data provided to the Fund have some shortcomings but are broadly adequate for surveillance." ### Rationale for Staff Assessment — sector-specific issues - National accounts: - "Lack of expenditure data and difficulties in reconciling the GDP deflator with CPI and terms of trade." - Prices: - "Rebasing exercise is described as setting 2024 as the base year, while the published data shows December 2024 as the base month; backcasted data published with a long delay without detailed data on sub-components." - Fiscal data: - "Inconsistent data from different sources in government, limited coverage and delays are hampering accurate and timely assessment of the fiscal position." - External data: - "Large errors and omissions, lack of granularity of reserves composition and delays in balance of payments data." - Monetary data: - "Long delays in publishing financial soundness indicators that also lack granularity complicate the assessment of financial conditions and risks." ### Use of data in Article IV consultations and observed gaps - Use of data and/or estimates: - "Use of data and/or estimates in Article IV consultations in lieu of official statistics available to staff. Staff does not use any data and/or estimates in the staff report in lieu of official statistics." - Other data gaps: - "Labor data are suffering from severe shortcomings given frequent changes in employment statistics and methodology--including definition of employment/unemployment." - "Economic data on states and localities are inexistent." - "Nation-wide sex-disaggregated data are very limited." - "Data on climate adaptation and mitigation are very limited as well." ### Changes since the last Article IV consultation - Persistent weaknesses continue to affect staff's assessment accuracy and potentially policy recommendations. - CPI rebasing: - "With the CPI rebasing, staff analysis is now based on new CPI data starting January 2025, with new weights for the consumption basket's components, but with a non-standard approach to defining the base period." - Fiscal coordination: - "A fiscal coordination committee was created to review, harmonize fiscal data and strengthen fiscal forecasting capacities." ### Corrective actions and capacity development priorities - Staff engagement and technical assistance: - "The team raised data issues with the authorities. Staff are liaising with STA to help build capacities and provide technical assistance to improve data quality." - "Staff will assess improvement in data quality after the GDP rebasing that was done with the support of ongoing CD from the Fund for the real sector since 2022." - "There is ongoing CD on prices for both CPI and PPI to close existing and new data gaps." - "There is an immediate need for authorities to take up CD from STA for external sector statistics (ESS) and government finance statistics (GFS) as these sectors show persistent material gaps that hamper surveillance since 2018." ### Data Standards Initiatives (Table 2) - "Nigeria participates in the Enhanced General Data Dissemination System (e-GDDS) and publishes the data on its National Summary Data Page since March 2016." ### Common Indicators Required for Surveillance (Table 3) — As of May 16, 2025 - Header: "As of May 16, 2025" - Selected raw table entries captured exactly as presented: - "Apr-25Apr-25DDDM...1M" - "2024Q4Mar-25MMMM1M2M" - "Mar-25Apr-25MMMM2M6W" - "Mar-25Apr-25MMMM1Q6W" - "Mar-25Apr-25MMMM2M6W" - "Aug-24Oct-24MMMM1Q6W" - "Apr-25Apr-25MMMM...1M" - "Dec-24Apr-25MMMM2M2W" - "Jan-25Mar-25MQAA3Q12M" - "Jan-25Mar-25MQQM1Q1M" - "2024Q4Apr-25QQQQ2Q1M" - "2024Q4Mar-25QAQA1Q6M" - "2024Q4Mar-25QQMM12W50D" - "2024Q4Feb-25QQQQ1Q50D" - "2024Q4Apr-25QQQQ2Q1M" - "2024Q4Mar-25QQAA3Q3M" - Table 3 categories (as labeled in the source): - "Data Provision to the Fund" - "Publication under the Data Standards Initiatives through the National Summary Data Page" - Indicators listed: Exchange Rates; International Reserve Assets and Reserve Liabilities of the Monetary Authorities; Reserve/Base Money; Broad Money; Central Bank Balance Sheet; Consolidated Balance Sheet of the Banking System; Interest Rates; Consumer Price Index; Revenue, Expenditure, Balance and Composition of Financing ‒ General Government; Revenue, Expenditure, Balance and Composition of Financing ‒ Central Government; International Investment Position; Stocks of Central Government and Central Government-Guaranteed Debt; External Current Account Balance; Exports and Imports of Goods and Services; GDP/GNP; Gross External Debt. ### Notes and methodological points (as stated) - Footnotes included in the source: - 1/ "Includes reserve assets pledged or otherwise encumbered, as well as net derivative positions." - 2/ "Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds." - 3/ "Foreign, domestic bank, and domestic nonbank financing." - 4/ "The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments." - 6/ Frequency and timeliness code definitions: (“D”) daily; (“W”) weekly or with a lag of no more than one week after the reference date; (“M”) monthly or with lag of no more than one month after the reference date; (“Q”) quarterly or with lag of no more than one quarter after the reference date; (“A”) annual.; ("SA") semiannual; ("I") irregular; ("NA") not available or not applicable; and ("NLT") not later than. - 7/ "Encouraged frequency of data and timeliness of reporting under the e-GDDS and required frequency of data and timeliness of reporting under the SDDS and SDDS Plus..." - 8/ "Based on the information from the Summary of Observance for SDDS and SDDS Plus participants, and the Summary of Dissemination Practices for e-GDDS participants, available from the IMF Dissemination Standards Bulletin Board (https://dsbb.imf.org/)." *Source: Annex IX. Data Issues, Nigeria Staff Report for the 2025 Article IV Consultation (selected tables and text).* ### 3.4 percent in 2024, with the services sector being the major driver and supported by ### 3.4 percent in 2024, with the services sector being the major driver and supported by ### Growth and Inflation - Real GDP growth: 3.4 percent in 2024, driven primarily by the services sector and supported by improved policy coordination between the monetary and fiscal authorities. - Non-oil sector expected to continue to drive output growth in the near term; sustaining the increase in oil production will enhance the sector's contribution to GDP growth. - Inflation: - 2024 (based on new base year and reconstituted consumption basket): 15.4 percent. - 2025: expected to level at 23.0 percent. - 2026: expected to decline to 18.0 percent. - 2027: expected to decline to 16.0 percent. ### External Sector and Reserves - External reserves: US$39.4 billion as of February 14, 2025. - Import cover: 9.6 months for goods and services. - Balance of payments: remained strong with a positive current account balance position in 2024, supported by improved FX inflows from portfolio investors and diaspora remittances. - Risks: increased tariffs and decline in oil prices could affect world economic growth, Nigeria’s oil income, and foreign exchange reserves. - Policy response: government prioritizes economic diversification to reduce dependence on oil income and promote non-oil industries such as agriculture, industry, and the digital economy. ### Fiscal Policy - Revenue and expenditure reforms aimed to bolster public finances and ensure sustainable debt in the medium-term. - 2024 measures: - 50 percent automated deduction of MDAs' revenues. - Direct contractor payments to boost tax remittances. - FIRS pilot for fiscalization to enhance compliance. - Medium-term tax policy measures: - Rationalize incentives (including pioneer status, free trade zone tax regimes, and import duty waivers). - Capital gains on chargeable assets to be included in income tax. - Top marginal personal income tax rate increase from 18.6 percent to 25.0 percent. - Modernization of FIRS, improving public procurement, fixing tax leakages, integrating technology with identity management. - Beyond the medium term (proposed measures): - Tax agent regulation, electronic invoicing. - Increase in VAT from 7.5 percent to 10.0 percent. - Adoption of a data-driven system for tax intelligence, harmonized revenue administration. - Introduction of a carbon tax on fossil fuels, and a voluntary disclosure program. - Capital expenditure and private financing: - Emphasis on financing through private capital under PPP arrangements, attracting institutional investors such as Pension Funds. - Example: Highway Development and Management Initiative (HDMI) as an opportunity for private sector funding. - Social and agricultural priorities: - Reallocation of funds for social protection, work with the World Bank Group to expand social protection. - Prioritize spending for inclusive growth, improve irrigation, use improved seeds and fertilizers. - Address conflict and insecurity in farming communities to boost food supply and reduce prices. - Debt sustainability: - Commitment to Fiscal Responsibility Act 2007, limiting borrowing to capital and human development. - Maintain public debt under 40 percent of GDP. - Aim to align the debt service-to-revenue ratio with the 30 percent threshold. - Focus on optimal borrowing supported by improved revenue mobilization while considering borrowing costs and risks. ### Monetary and Exchange Rate Policy - Central Bank of Nigeria (CBN) objectives: price stability, credible exchange rate regime, groundwork for an inflation-targeting framework. - Policy actions since 2024: - Tight policy stance maintained. - Cumulative policy rate increase of 875 basis points to address inflation, stabilize the exchange rate, and restore positive real interest rates. - Transitioning to an inflation targeting monetary policy with enhanced forecasting tools, communication, and coordination with fiscal authorities. - Aggressive recovery of outstanding development finance injections and maintenance of statutory limits on advances in coordination with fiscal authority. - Increased open market operations and net open position (NOP) limits to contain FX exposure. - FX market reforms: - Full unification of FX market windows (in line with Fund advice). - Clearance of all verified FX backlogs and removal of administrative limits on FX rates quoted by IMTOs. - Reinforcement of the willing-buyer, willing-seller model with the B-Match system and FX Code. - FX Code structured around six principles: Ethics, Governance, Execution, Information Sharing, Risk Management & Compliance, and Confirmation & Settlement processes. - Outcomes: improved market sentiment, enhanced FX liquidity, and narrowed premium between official and parallel market rates. ### Financial Sector Policy - Financial sector: broadly resilient with key financial soundness indicators within regulatory limits. - Regulatory and supervisory measures: - Implementation of Basel III capital standards. - Deposit Money Banks directed to increase minimum capital requirements. - Phase-out of pandemic-era forbearance measures and strengthened supervisory framework. - Expected further resilience as banks work towards meeting new recapitalization deadline. - Collaboration to address FATF grey-listing concerns, improve AML/CFT supervision, and address risks from Fintech innovation. ### Structural Reforms and Governance - Governance and transparency: - Enforcement of public disclosure of contracts, licenses, permits, and revenue. - Plans to pass laws for access to Public Officers' Asset Declarations. - Technical Unit on Governance and Anti-Corruption Reforms (TUGAR) issues reports and guides reforms. - Data and statistical coordination: - Ministry of Finance coordinating with other agencies to harmonize fiscal data across agencies to ensure accurate fiscal forecasts. - Emphasis on production and release of data on production, prices, financial and external sectors using standard and comparable methods. - Investment climate and regulatory reform: - Regulatory reforms pursued to make Nigeria an attractive investment destination despite security and global uncertainty challenges. - Emphasis on stakeholder consultation, consistent policies, and support for growth sectors for job creation and exports. - Reforms to enhance competition, innovation, and productivity; strengthen frameworks for concessions and PPPs by tackling legal barriers to private investment. - Food security and energy transition: - Initiatives targeted at improving food supply to improve food security and address inflationary pressure. - Continued reforms such as full implementation of fuel subsidy removal and revenue mobilization through tax reforms. - Energy policy adjustments to combat climate change: stricter emission standards, carbon pricing, and renewable energy targets; review governance reforms and expedite energy transition plans. ### Conclusion and Engagement with the Fund - Authorities reaffirm commitment to implement policy reforms to improve economic and social landscape, attract capital, enhance the business environment, and diversify away from oil dependency. - Authorities value Fund advice and support and seek Directors' support for concluding 2025 Article IV consultation. *Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1ngaea2025001-print-pdf.pdf* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1ngaea2025001-print-pdf.pdf_