IMF Executive Board Concludes Post Financing Assessment with Nigeria
IMF News, February 9, 2024
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- Published: February 9, 2024
Executive summary
- On January 12, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Post Financing Assessment (PFA) and endorsed the Staff Appraisal on a lapse-of-time basis.
- Staff assessment: Nigeria’s capacity to repay the Fund is adequate under the baseline.
- The new administration implemented major structural reforms: removing fuel subsidies and unifying the various official foreign exchange windows.
- Authorities have taken measures to ease the impact of rising inflation: released cereals from the grain reserve, provided subsidized fertilizer to farmers, capped retail fuel and electricity prices (partially reversing the fuel subsidy removal), implemented a civil service wage award, and suspended the VAT on diesel.
- Economic and social challenges highlighted: growth barely keeping up with population dynamics; low revenue collection; persistent security concerns affecting agriculture and food security; latest estimates show 25 million (13 percent of the population) as food insecure; poverty rate was 37 percent in 2022.
Economic outlook and projections
- Growth forecasts:
- Real GDP: 3.3 (2022 Act.), 2.9 (2023 Est.), 3.0 (2024 Proj.), 3.1 (2025 Proj.)
- Oil and Gas GDP: -19.2 (2022 Act.), 1.4 (2023 Est.), 2.5 (2024 Proj.), 3.8 (2025 Proj.)
- Non-oil non-agriculture GDP: 6.2 (2022 Act.), 3.4 (2023 Est.)
- Production of crude oil (million barrels per day): 1.38 (2022 Act.), 1.46 (2023 Est.), 1.47 (2024 Proj.), 1.52 (2025 Proj.)
- Inflation and prices:
- GDP deflator: 11.3 (2022 Act.), 17.8 (2023 Est.), 20.8 (2024 Proj.), 12.8 (2025 Proj.)
- Consumer price index (annual average): 18.8 (2022 Act.), 25.0 (2023 Est.), 25.2 (2024 Proj.), 14.8 (2025 Proj.)
- Consumer price index (end of period): 21.3 (2022 Act.), 31.1 (2023 Est.), 17.1 (2024 Proj.), 15.0 (2025 Proj.)
- Headline inflation reached 27 percent year-on-year in October (food inflation 32 percent).
- External sector:
- Current account balance: 0.2 (2022 Act.), 0.5 (2023 Est.), 0.7 (2024 Proj.), 0.6 (2025 Proj.)
- Price of Nigerian oil (US$ per barrel): 99.0 (2022 Act.), 82.4 (2023 Est.), 81.2 (2024 Proj.), 77.4 (2025 Proj.)
- External debt outstanding (US$ billions): 119.9 (2022 Act.), 110.1 (2023 Est.), 109.1 (2024 Proj.), 114.0 (2025 Proj.)
- Gross international reserves (US$ billions, CBN definition): 36.6 (2022 Act.), 27.9 (2023 Est.), 23.8 (2024 Proj.), 26.3 (2025 Proj.)
- Gross international reserves (equivalent months of imports of G&Ss): 6.6 (2022 Act.), 4.4 (2023 Est.)
- Note: Based on the IMF definition, the gross international reserves are $8.2 billion lower in 2023.
- Other macro indicators:
- Nominal GDP at market prices (trillions of naira): 202.4 (2022 Act.), 245.3 (2023 Est.), 305.4 (2024 Proj.), 355.2 (2025 Proj.)
- Nominal non-oil GDP: 190.4 (2022 Act.), 229.8 (2023 Est.), 278.9 (2024 Proj.), 326.7 (2025 Proj.)
- Nominal GDP per capita (US$): 2,202 (2022 Act.), 1,699 (2023 Est.), 1,219 (2024 Proj.), 1,271 (2025 Proj.)
- Investment and savings (Percent of GDP): Gross national savings: 20.2 (2022 Act.), 19.7 (2023 Est.), 21.8 (2024 Proj.)
- Investment (Percent of GDP): 19.9 (2022 Act.), 19.2 (2023 Est.), 19.5 (2024 Proj.), 3.6 (2025 Proj.) — and additional investment rows show 17.5, 16.1, 16.3, 17.6 (table entries preserved).
Fiscal and monetary policy assessment
- Fiscal:
- Consolidated government operations:
- Total revenues and grants: 9.1 (2022 Act.), 9.4 (2023 Est.), 10.8 (2024 Proj.), 10.9 (2025 Proj.)
- Of which: oil and gas revenue: 4.3 (2022 Act.), 5.4 (2023 Est.), 5.1 (2024 Proj.)
- Of which: non-oil revenue: 4.8 (2022 Act.), 4.9 (2023 Est.), 5.3 (2024 Proj.), 5.8 (2025 Proj.)
- Total expenditure and net lending: 14.5 (2022 Act.), 15.1 (2023 Est.), 15.5 (2024 Proj.)
- Of which: fuel subsidies: 2.2 (2022 Act.), 0.9 (2023 Est.), 0.8 (2024 Proj.), 0.1 (2025 Proj.)
- Overall balance: -5.4 (2022 Act.), -4.3 (2023 Est.), -4.5 (2024 Proj.)
- Non-oil primary balance: -6.9 (2022 Act.), -7.0 (2023 Est.), -6.6 (2024 Proj.), -6.4 (2025 Proj.)
- Public gross debt: 38.7 (2022 Act.), 45.6 (2023 Est.), 44.5 (2024 Proj.), 44.3 (2025 Proj.)
- Of which: Fx debt: 8.5 (2022 Act.), 15.6 (2023 Est.), 16.7 (2024 Proj.), 17.9 (2025 Proj.)
- FGN interest payments (percent of FGN revenue): 90.4 (2022 Act.), 83.4 (2023 Est.), 81.1 (2024 Proj.), 79.2 (2025 Proj.)
- Authorities are developing an ambitious domestic revenue mobilization agenda; envisaged reduction in the overall deficit in 2024 would help contain debt vulnerabilities and eliminate the need for CBN financing.
- Monetary:
- The Central Bank of Nigeria (CBN) has set price stability as the core objective and is pursuing monetary tightening and actions to mop up excess liquidity.
- Recommendation: Continuing to raise the monetary policy rate until it is positive in real terms would be an important signal.
- The CBN has dropped its previous role in development finance and the new CBN team has committed to price stability.
- Settling the CBN’s overdue dollar obligations will help rebuild confidence in the central bank and the naira.
- Sharing comprehensive information on Nigeria’s reserves position would facilitate a more complete assessment of the external situation.
- The authorities are exploring options to strengthen Nigeria’s reserve position, though a careful assessment of unintended consequences is needed in some cases.
Policy recommendations and reforms
- Fiscal and social policy:
- Phase out fuel and electricity subsidies completely; they are costly and do not reach those that most need government support.
- Continue focus on revenue mobilization and digitalization to improve public service delivery and safeguard fiscal sustainability.
- Provide temporary and targeted support to the most vulnerable in the form of social transfers given the ongoing cost-of-living crisis.
- Monetary and external:
- Continue monetary tightening until the policy rate is positive in real terms.
- Assess carefully options to strengthen reserves and settle CBN overdue dollar obligations.
- Share comprehensive reserves information for better assessment.
- Structural:
- Implement a comprehensive reform agenda to materially improve the medium-term outlook, enabling much improved growth if successfully developed and implemented.
- Presidential Fiscal Policy and Tax Reforms Committee has been appointed to make proposals for raising domestic revenue to support investments in infrastructure, health, and education.
Risks, vulnerabilities, and downside scenario
- Key risks:
- Difficult external environment: scarce external financing (market and official) and surging global food prices due to conflict and geo-economic fragmentation.
- Wide-ranging domestic challenges: security concerns in northern Nigeria affecting agriculture and food security; low reserves; very limited fiscal space.
- Per-capita growth has stalled; poverty and food insecurity are high (25 million food insecure; 37 percent poverty rate in 2022).
- Downside scenario:
- In a downside scenario, difficult trade-offs may arise between urgent humanitarian needs and debt service, including to the Fund.
- Response to such circumstances would require aggressive monetary tightening and fiscal adjustment combined with support from development partners to restore macroeconomic stability.
Key statistics (selected exact figures preserved)
- Growth and production:
- Real GDP: 3.3 (2022), 2.9 (2023), 3.0 (2024), 3.1 (2025)
- Production of crude oil (million barrels per day): 1.38 (2022), 1.46 (2023), 1.47 (2024), 1.52 (2025)
- Prices and inflation:
- Headline inflation: 27 percent year-on-year in October; food inflation 32 percent
- Consumer price index (annual average): 18.8 (2022), 25.0 (2023), 25.2 (2024), 14.8 (2025)
- Fiscal aggregates:
- Total revenues and grants (percent of GDP): 9.1 (2022), 9.4 (2023), 10.8 (2024), 10.9 (2025)
- Total expenditure and net lending (percent of GDP): 14.5 (2022), 15.1 (2023), 15.5 (2024)
- Public gross debt: 38.7 (2022), 45.6 (2023), 44.5 (2024), 44.3 (2025)
- Of which: Fx debt: 8.5 (2022), 15.6 (2023), 16.7 (2024), 17.9 (2025)
- External sector and reserves:
- Gross international reserves (US$ billions, CBN definition): 36.6 (2022), 27.9 (2023), 23.8 (2024), 26.3 (2025)
- External debt outstanding (US$ billions): 119.9 (2022), 110.1 (2023), 109.1 (2024), 114.0 (2025)
- Social indicators:
- Food insecure: 25 million (13 percent of the population)
- Poverty rate: 37 percent in 2022
Source: IMF Executive Board Concludes Post Financing Assessment with Nigeria (Press Release No. 24/43), February 9, 2024.
