At the 2025 Spring Meetings of the International Monetary Fund (IMF) and the World Bank, held in Washington, D.C., the IMF called on Nigeria to intensify fiscal reforms by adopting more efficient spending practices and enhancing revenue collection.
The global lender emphasized that prudent fiscal management is vital for maintaining economic stability and building resilience against domestic and international shocks.
Davide Furceri, Division Chief in the Fiscal Affairs Department at the IMF, acknowledged that Nigeria has made some progress in adjusting its fiscal policies. However, he emphasized that the government must go further by prioritizing its expenditures and making more effective use of public funds. He noted that while the country has significant spending needs, including in social welfare and public infrastructure, these should be addressed strategically to deliver maximum impact.
Efficiency and Prioritization Are Key
The IMF emphasized that improving the quality of public spending is just as important as increasing revenue. Furceri urged Nigerian authorities to ensure that public investments are well-targeted and aligned with the country’s development priorities. According to him, stronger fiscal institutions—such as well-established medium-term budgeting frameworks and transparent financial management systems—are crucial for guiding economic decisions and reducing uncertainty.
These reforms would enable Nigeria to create a stable economic environment, which is necessary for attracting private investment and fostering sustainable growth.
Building Fiscal Resilience
In a related statement, Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department, reinforced the message that fiscal policy must serve as a stabilizing tool rather than a source of volatility. He advised Nigeria to develop financial buffers by reducing its public debt and creating a contingency fund in its budget to respond to future economic shocks.
Gaspar outlined three core fiscal policy objectives that Nigeria and other emerging economies should adopt to ensure long-term stability:
- Harmonize fiscal, monetary, and structural policies to create a coherent economic strategy.
- Lower public debt and rebuild reserves, improving the government’s ability to manage crises.
- Implement structural reforms to unlock potential growth, even amid uncertain global economic conditions.
He further emphasized that confidence and trust in government institutions are fostered through consistent fiscal discipline, fair taxation, and prudent public expenditure. “Finance ministers must look beyond short-term pressures and invest in long-term prosperity,” Gaspar advised.
Navigating Global Risks
The IMF also raised concerns about the increasing risks to fiscal management posed by the global economic climate. Notably, recent trade tensions such as the surge in tariffs introduced by the U.S. administration have disrupted global trade patterns, adding pressure on emerging markets to remain agile in their fiscal planning.
For Nigeria, this means that resilience must be built into its fiscal systems. The IMF advised the country to strengthen domestic revenue mobilization, eliminate inefficiencies in government spending, and adopt policies that prepare the economy for external shocks.
These recommendations, if effectively implemented, would not only stabilize Nigeria’s economy but also enhance its appeal to international investors and development partners. With the right mix of fiscal prudence and reform-driven governance, Nigeria has the potential to position itself for inclusive, long-term economic growth.
