The International Monetary Fund (IMF) has advised the Nigerian government to urgently review its 2025 budget assumptions as global oil prices continue to decline, threatening fiscal stability in Africa’s largest economy.
In its latest Article IV report released this week, the IMF noted that Nigeria’s budget was prepared with an oil benchmark of $75 per barrel, but current market realities show Brent crude trading around $68 per barrel. This significant drop poses risks to revenue projections and could worsen the fiscal deficit if not addressed promptly.
The IMF emphasized that recalibrating the budget to reflect more realistic oil price forecasts would help prevent severe revenue shortfalls and ensure that critical social programs, including targeted cash transfers to the most vulnerable Nigerians, remain adequately funded.
“Given Nigeria’s heavy reliance on oil for government revenue and foreign exchange, lower prices necessitate swift adjustments to spending plans to safeguard macroeconomic stability and protect the poor,” the IMF stated.
Despite the fiscal challenges, the IMF projects Nigeria’s economy will grow by approximately 3.4% in 2025, supported by modest gains in oil production and improving non-oil activities. However, inflation remains a pressing concern, with food and transport costs continuing to erode household purchasing power.
Economic analysts agree that recalibrating the budget could help rebuild investor confidence, stabilize the naira, and reduce pressure on foreign reserves. Recent efforts by the Central Bank of Nigeria to support the currency have yielded modest results, with the naira strengthening slightly against the dollar in official markets this week.
Nigeria’s Minister of Finance, Wale Edun, has acknowledged the IMF’s recommendations, indicating that the government is open to reviewing budget assumptions if current oil price trends persist.
The IMF also urged Nigerian authorities to accelerate reforms aimed at diversifying the economy away from oil dependence, improving tax collection, and expanding support for small and medium enterprises to drive sustainable growth.
As global economic uncertainties persist, timely policy adjustments will be key to shielding Nigeria’s economy from external shocks and ensuring the government can meet its commitments to citizens.