IMF warns Nigeria to manage rising debt despite upgraded growth forecast, praising reforms but cautioning on fiscal risks and fiscal deficits

Nigeria IMF warning came strongly during the 2025 Annual Meetings of the International Monetary Fund and World Bank in Washington D.C., with officials urging the country to manage rising debt even as it praised ongoing economic reforms.

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The Fund upgraded Nigeria’s 2025 growth forecast to 3.9 percent, up from 3.4 percent, citing stronger fundamentals, improved oil production, and growing investor confidence.

“Nigeria’s policy reforms have been significant, but the next phase requires policy consistency and credible debt management,” said Abebe Selassie, IMF’s Africa Director.

Central Bank Governor Olayemi Cardoso noted that inflation had fallen to 18.02 percent in September, the lowest in three years. The naira has stabilised, and foreign reserves now exceed $43 billion, he added, pledging that reforms would continue despite political pressures.

The IMF described Nigeria’s rebound as “real but fragile”, projecting inflation to ease to 23 percent in 2025. However, it warned that fiscal deficits may rise to 3.7 percent of GDP in 2026 as debt servicing increasingly crowds out development spending.

Selassie emphasised that Nigeria must boost non-oil revenues, digitalise tax collection, and maintain transparency in borrowing, noting that high debt costs across Africa are limiting funds for health, education, and infrastructure.

IMF Managing Director Kristalina Georgieva commended Nigeria’s exchange rate reforms and anti-corruption measures but called for stronger action against illicit financial flows.

Governor Cardoso also revealed plans to restructure the China currency swap deal, confirming that Nigeria now records a trade surplus of six percent of GDP, driven by export growth and local production.

Minister of State for Finance Doris Uzoka-Anite highlighted government focus on job creation and youth empowerment through investments in infrastructure, agriculture, and the digital economy.

UBA Chairman Tony Elumelu, speaking on a panel about Artificial Intelligence, urged African leaders to harness digital technology for inclusive growth, warning that “AI must democratise prosperity, not deepen inequality.”

Georgieva concluded that “Nigeria is on the right path. The reforms are difficult, but staying the course will determine how much of today’s progress translates into jobs and prosperity.”

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The IMF’s assessment underscores that while Nigeria’s economic recovery is promising, careful management of debt, fiscal policy, and revenue generation remains crucial to sustaining growth and ensuring development benefits reach citizens.