Selected Issues Papers

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. An 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. While relatively small, the financial sector is exposed to spillovers to asset quality and may even be directly impacted via its physical presence in Lagos. Fiscal policy will have 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. As a result, Nigeria will face fiscal and associated external financing gaps.