The International Monetary Fund (IMF) has cautioned that Nigeria’s 2025 federal budget needs significant revision due to falling oil prices and structural constraints. In its recent Article IV consultation, the Fund highlighted that the benchmark assumption of $75 per barrel is outdated, as oil now trades near $68, threatening fiscal stability and undermining revenue projections.
While Nigeria’s economy is expected to grow by 3.4% in 2025 and 3.2% in 2026, the IMF noted that this remains insufficient to boost per capita growth or bring inflation under control. The budget, which targets a fiscal deficit of around 4% of GDP, is in danger of overshooting due to declining oil revenue and sluggish execution of government spending.
To realign the budget with current realities, the IMF recommends:
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Fuel subsidy savings: Capture full savings from subsidy cuts (estimated at roughly 2% of GDP).
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Spending efficiency: Prioritize administrative reforms and reprioritization, especially in recurrent spending.
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Tight monetary policy: Maintain positive real interest rates to curb inflation.
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Strengthen social safety nets: Scale up cash transfers to protect vulnerable groups facing high poverty and food insecurity.
The Fund also praised Nigeria’s recent foreign exchange reforms, noting improved alignment between official and parallel exchange rates, which have bolstered investor confidence.
In summary, the IMF’s message is clear: Nigeria must swiftly adjust its 2025 budget to prevent fiscal slippage, reinforce macroeconomic stability, and safeguard its most vulnerable citizens.