The International Monetary Fund (IMF) says its executive board has concluded the 2025 Article IV consultation with Nigeria, projecting a 3.4 percent expansion in the country’s real GDP for 2025.
The IMF Article IV consultation is a regular review of a
country’s economic performance and policies, providing assessments and
recommendations for improvement.
On April 22, MF projected Nigeria’s economy will grow by 3
percent this year, compared to the 3.2 percent forecasted in October 2024.
In a statement on Wednesday, the IMF also forecasted that
inflation would continue to fall in the medium term, citing sustained tight
macroeconomic policies and an expected easing in retail fuel prices.
“The Nigerian authorities have implemented major reforms
over the past two years which have improved macroeconomic stability and
enhanced resilience,” the IMF said.
“The authorities have removed costly fuel subsidies, stopped
monetary financing of the fiscal deficit and improved the functioning of the
foreign exchange market.
“Investor confidence has strengthened, helping Nigeria
successfully tap the Eurobond market and leading to a resumption of portfolio
inflows. At the same time, poverty and food insecurity have risen, and the
government is now focused on raising growth.
“Growth accelerated to 3.4 percent in 2024, driven mainly by
increased hydrocarbon output and vibrant services sector. Agriculture remained
subdued, owing to security challenges and sliding productivity.
“Real GDP is expected to expand by 3.4 percent in 2025,
supported by the new domestic refinery, higher oil production and robust
services. Against a complex and uncertain external environment, medium-term
growth is projected to hover around 31⁄2 percent, supported by domestic reform
gains.
“Gross and net international reserves increased in 2024,
with a strong current account surplus and improved portfolio inflows. Reforms
to the fx market and foreign exchange interventions have brought stability to
the naira.
“Naira stabilization and improvements in food production
brought inflation to 23.7 percent year-on-year in April 2025 from 31 percent
annual average in 2024 in the backcasted rebased CPI index released by the
Nigerian Bureau of Statistics. Inflation should decline further in the medium-term
with continued tight macroeconomic policies and a projected easing of retail
fuel prices.
“Fiscal performance improved in 2024. Revenues benefited
from naira depreciation, enhanced revenue administration and higher grants,
which more-than-offset rising interest and overheads spending.
“Downside risks have increased with heightened global
uncertainty.
“A further decline in oil prices or increase in financing
costs would adversely affect growth, fiscal and external positions, undermine financial
stability and exacerbate exchange rate pressures.”
The IMF added that any deterioration in security could
negatively impact growth and worsen food insecurity.
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