IMF promises renewed focus on tracing illegal funds to halt Nigeria’s fiscal leakages

The International Monetary Fund (IMF) has publicly highlighted the detrimental effect of Illicit Financial Flows (IFFs) out of Nigeria, noting that these leakages are significantly worsening the country’s persistent revenue problem.

Kristalina Georgieva, Fund’s Managing Director, IMF, pledged a renewed institutional focus on tracing such flows to effectively plug the fiscal leakages plaguing Nigeria’s economy.

“We believe that for countries like Nigeria, the IMF’s renewed focus on tracing Illicit Financial Flows could provide a blueprint for plugging the fiscal leakages that have long undermined revenue generation and sustainable growth, ”she said at the ongoing 2025 Annual Meetings of the IMF and World Bank in Washington, DC.

Georgieva said that the IMF’s enhanced strategy for identifying and tracking Illicit Financial Flows could provide a working blueprint for Nigeria to address the entrenched fiscal vulnerabilities that have long undermined its attempts at sustainable revenue generation and overall growth.

According to her, illicit financial flows, which include stolen public funds, proceeds from criminal activities, and untraceable digital transactions, continue to erode governance systems, drain public resources, and cripple developmental efforts, especially in developing economies.

In a recent policy briefing, IMF officials had noted that IFFs now come in “multiple dimensions.” These range from outright embezzlement of taxpayers’ money to private funds channelled into illegal ventures that threaten national welfare.

The digital economy, they added, had further complicated the challenge with cryptocurrencies, such as Bitcoin, providing an avenue for anonymous financial transactions.

IMF has commended Nigeria for making notable progress in revenue collection and for improving transparency in its foreign exchange and reserve management.

They highlighted that movements in exchange rates play a critical role as a natural buffer that helps economies adjust to external shocks. They explained that a depreciating exchange rate is not inherently negative and can, in fact, be beneficial when it helps restore balance and competitiveness within the domestic economy.