The International Monetary Fund (IMF) has sounded the alarm on Nigeria’s financial outlook, predicting a sharp decline in foreign reserves to $24 billion by 2024.
In its latest report, the IMF highlighted looming challenges for Africa’s largest economy, citing factors such as dwindling crude oil exports, debt repayments, and persistent portfolio outflows.
“This projection underscores the pressing need for strategic economic measures to mitigate potential forex challenges,” remarked IMF spokesperson, Dr. Angela Brown, during a press briefing.
The report paints a grim picture of Nigeria’s financial landscape, attributing the anticipated decline in reserves to various factors including oil theft, underinvestment in critical infrastructure, and sluggish Foreign Direct Investment (FDI).
Furthermore, profit repatriation from the oil sector has declined, further exacerbating the strain on the country’s current account.
“While the country witnessed a current account surplus in the first half of 2023, the decline in reserves indicates a precarious situation exacerbated by external factors,” stated Dr. Brown.
The IMF report also underscored concerns regarding Nigeria’s revenue collection, citing its adverse impact on public services and investment.
Headline inflation has soared to 27 per cent year-on-year, driven by factors such as fuel subsidy removal, currency depreciation, and agricultural challenges.
“The escalating inflation coupled with dwindling reserves poses significant economic challenges for Nigeria,” Dr. Brown emphasized.
Despite the bleak forecast, the IMF remains cautiously optimistic about a potential recovery, projecting a gradual increase in reserves to $38 billion by 2028. However, this optimism hinges on the resumption of portfolio inflows and strategic economic reforms.
“Nigeria must implement robust policies to bolster investor confidence and attract much-needed capital inflows,” urged Dr. Brown.
The IMF’s warning comes amidst growing concerns over Nigeria’s economic stability, with stakeholders calling for urgent measures to address the underlying structural vulnerabilities and foster sustainable growth.