The International Monetary Fund (IMF) has warned Nigeria to review its 2025 budget to avoid a financial crisis, citing significant risks due to falling oil prices, lower production levels, and challenges in capital expenditure execution.
The IMF’s Article IV consultation report recommends that Nigeria urgently revise its budget targets to reflect current economic realities.
The IMF predicts Nigeria’s fiscal deficit could reach 4.7% of GDP in 2025, exceeding budget expectations.
The 2025 budget was based on optimistic hydrocarbon revenue projections, which now face challenges due to the global downturn in oil prices.
The IMF notes that Nigeria’s history of difficulties in executing large-scale infrastructure projects suggests capital expenditure targets will be challenging to meet.
The IMF suggests adopting a neutral fiscal stance in 2025 to safeguard macroeconomic stability while maintaining crucial investments.
Enhance social safety nets to mitigate economic hardship’s adverse effects on vulnerable populations.
Broaden the tax base and strengthen revenue mobilization efforts to reduce dependence on oil revenues.
The government plans to adjust the budget to lower oil prices, push for higher hydrocarbon production, and boost revenue.
The IMF emphasizes the importance of managing Nigeria’s growing sovereign debt, which increased to 53% of GDP in 2024.
The Federal Government has reaffirmed its commitment to ensuring economic stability despite global uncertainties. The Minister of Finance, Wale Edun, emphasized the government’s proactive stance in safeguarding the country’s economic resilience.
