MARCEL MBAMALUThe International Monetary Fund (IMF) has warned Nigeria, stating that the country must remain vigilant amid mounting global trade tensions and tightening financial conditions.
It was issued on April 22, 2025, during the Global Financial Stability Report press briefing at the IMF/World Bank Spring Meetings in Washington, DC.
Join our WhatsApp ChannelThe Fund highlighted risks to Nigeria’s fiscal stability due to declining government revenues and urged prudent fiscal management, including cutting waste and aligning spending with actual revenue.
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Inflation remains a critical concern, with the IMF projecting an average rate of 26.5% in 2025, rising to 37% in 2026, complicating efforts to maintain price stability and protect vulnerable populations.
The Bases of the Warning
The IMF’s warnings stem primarily from concerns about reckless and inefficient government spending amid a challenging global economic environment. At the Meetings Davide Furceri, Division Chief in the IMF’s Fiscal Affairs Department, stressed that while Nigeria has made important fiscal reforms, continued discipline in spending is crucial, especially given the government’s plans to allocate large sums, such as N6.1 billion for international travel in 2025-which raise questions about prioritisation and efficiency.
This warning is compounded by projections that Nigeria will spend more than it earns in 2025, worsening the fiscal deficit and risking macroeconomic stability.
IMF also highlighted external pressures, including lower oil prices, subdued global demand, and mounting trade tensions that threaten Nigeria’s export earnings and fiscal revenue. Inflation remains high, with forecasts of 26.5% in 2025 and a possible rise to 37% in 2026, further complicating economic management. The Fund calls for prudent fiscal reforms, improved revenue mobilisation, and stronger public financial management to safeguard economic stability and protect vulnerable populations amid these risks
Initial Warnings
The current Nigerian administration has received similar warnings from internal bodies. For instance, the Nigerian Economic Summit Group (NESG), an influential private sector think tank, launched its 2025 Private Sector Outlook in March 2025 had emphasised that despite some reform-driven growth improvements, stagnant productivity and rising inflation pose risks to living standards and economic stability, echoing concerns similar to those raised by the IMF.
The Centre for Petroleum, Energy Economics and Law (CEPEAR) at the University of Lagos have also projected a challenging macroeconomic outlook for 2025. It warns that if rising inflation and exchange rate pressures persist, it could erode purchasing power and potentially trigger social unrest. They also highlighted Nigeria’s heavy debt burden and fiscal constraints, which align with the IMF’s warnings about fiscal sustainability.
Thus, both the private sector (NESG) and academic institutions have issued cautionary signals internally, reinforcing the IMF’s external warnings about the need for fiscal discipline, inflation control, and structural reforms to safeguard Nigeria’s economic stability in 2025.
Does Nigeria understand this?
Sometimes it is not just about the warnings, it is whether the country in question understands what is being said.
Research and official data show that Nigeria does have a definable and structured economy beyond just loose buying and selling.
Nigeria operates a mixed economy, combining elements of capitalism with government intervention, and is classified as a middle-income, emerging market with significant sectors in manufacturing, finance, telecommunications, technology, and entertainment. Yet the structure is heavily skewed: primary production, especially oil, dominates exports and government revenue, while the manufacturing sector remains small and underdeveloped.
The Unprogressive Reforms by the Current Administration
Amid Nigeria’s challenges and subsequent warnings, it is crucial to question if Tinubu’s reforms in the forex and subsidy arenas are really progressive, as the IMF says.
On April 22, 2025, Jason Wu, Assistant Director in the IMF’s Monetary and Capital Markets Department, stated at the Global Financial Stability Report briefing that Nigeria’s macroeconomic performance has “held up,” with “GDP growth fairly consistent, and inflation coming down.”
He attributed this progress to reforms by the Nigerian authorities, including the liberalisation of the exchange rate regime, saying, “I think the reforms that the authorities have done, including the liberalisation of exchange rates, have helped in that regard” and that these policies had improved Nigeria’s sovereign credit spreads and macroeconomic outlook.
However, earlier on 18 April 2025, Axel Schimmelpfennig, IMF mission chief for Nigeria, gave a more cautious assessment after the 2025 Article IV consultation. He acknowledged the government’s “crucial actions to stabilise the economy” but warned that “gains have yet to benefit all Nigerians, as poverty and food insecurity remain high.”
He stressed that despite reforms like subsidy removal, many Nigerians continue to suffer amid a cost-of-living crisis, urging that fiscal savings be redirected to protect vulnerable populations. Who then is benefiting from those reforms?
Let’s assume beneficiaries of Nigeria’s forex and subsidy reforms so far might be investors, financial institutions, and segments of the formal private sector, as pointed out by the IMF’s Jason Wu concerning the exchange rate. So what about the many citizens, and the larger society, what are they benefiting?
Can Nigeria ever be vigilant?
Is it a warning when the country has no industries, a very weak currency, an import-dependent economy, a corrupt financial situation, etc?
The country’s economy has grown at only about 3% annually-barely matching population growth-and nearly 93% of Nigerians work in the informal sector, often in low-income, insecure jobs without social protection. Persistent inflation, which hit 34.8% in late 2024, continues to erode real incomes, pushing an additional 13 million people into poverty in 2025 and leaving most social safety nets inadequate.
Foreign investment is declining due to insecurity, poor infrastructure, and macroeconomic instability, while the formal sector remains too small to drive broad-based growth or job creation. Most government budgets prioritise recurrent spending over capital investment, reinforcing a consumerist, import-dependent economy rather than building productive capacity.
Given these realities, IMF warnings may sound hollow: without foundational reforms to address production, governance, and social protection, calls for vigilance offer little practical hope in a system where the majority remain excluded from the benefits of growth.
While some countries like China may make out something on retaliatory tariffs, in Nigeria, retaliatory tariffs are unlikely to be effective because of the country’s dependency on imported goods.
So, what can Nigeria really do apart from waiting and being tossed around by the global wave of economic tsunamis from the economies long accused of prescribing to the country highly toxic economic scripts, only to turn around with all kinds of pretentious warnings and outlooks.
The Way Forward
Nigeria does not have to remain passive or simply react to global economic shocks and externally imposed policies. Research and expert analysis consistently point to a clear path: Nigeria must prioritise genuine economic diversification, invest in human capital, and undertake institutional reforms to build resilience and chart its course.
Since multiple studies highlight that Nigeria’s over-reliance on oil makes it highly vulnerable to external shocks. Shifting focus to sectors like agriculture, agro-processing, light manufacturing, technology, and services can create jobs, boost exports, and cushion the economy against global volatility.
Again, investing in human capital and infrastructure is critical. Nigeria’s current skills base is insufficient for the kind of innovation and industrialisation needed for structural transformation. Expanding education, vocational training, and infrastructure (power, transport, digital) will lay the groundwork for a more productive, competitive economy.
Institutional reforms and good governance must be front and centre. Strengthening anti-corruption measures, ensuring policy continuity, and improving the business environment are necessary to attract investment and unlock private sector growth.
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Finally, strategic partnerships, domestic and international, help Nigeria access new markets, technologies, and financing. Embracing innovation, supporting small and medium enterprises, and leveraging Nigeria’s large domestic market will further drive sustainable growth.
The IMF’s warnings highlight vulnerabilities from global shocks, but real economic independence requires Nigeria to focus on industrialisation, diversify its economy, and develop local expertise and infrastructure.
Dr Mbamalu, a Jefferson Journalism Fellow, Member of the Nigerian Guild of Editors and Media Consultant, is the Publisher of Prime Business Africa
Dr. Marcel Mbamalu is a communication scholar, journalist and entrepreneur. He holds a Ph.D in Mass Communication from the University of Nigeria, Nsukka and is the Chief Executive Officer Newstide Publications, the publishers of Prime Business Africa.
A seasoned journalist, he horned his journalism skills at The Guardian Newspaper, rising to the position of News Editor at the flagship of the Nigerian press. He has garnered multidisciplinary experience in marketing communication, public relations and media research, helping clients to deliver bespoke campaigns within Nigeria and across Africa.
He has built an expansive network in the media and has served as a media trainer for World Health Organisation (WHO) at various times in Northeast Nigeria. He has attended numerous media trainings, including the Bloomberg Financial Journalism Training and Reuters/AfDB training on Effective Coverage of Infrastructural Development of Africa.
A versatile media expert, he won the Jefferson Fellowship in 2023 as the sole Africa representative on the program. Dr Mbamalu was part of a global media team that covered the 2020 United State’s Presidential election. As Africa's sole representative in the 2023 Jefferson Fellowships, Dr Mbamalu was selected to tour the United States and Asia (Japan and Hong Kong) as part of a 12-man global team of journalists on a travel grant to report on inclusion, income gaps and migration issues between the US and Asia.
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