The International Monetary Fund has highlighted that Nigeria is grappling with a compounding cost-of-living crisis, worsened by stagnant per-capita growth, poverty, and heightened food insecurity.
Outlined in the report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria,’ the organisation underscored the escalating challenges amidst mounting inflation, currency devaluation, sluggish economic expansion, and closures of businesses.
Key points from the report emphasise that deficient revenue collection has impeded the delivery of essential services and public investment.
Notably, headline inflation surged to 27 percent year-on-year in October, with food inflation peaking at 32 percent.
These figures are attributed to the repercussions of fuel subsidy removal, depreciation of the exchange rate, and inadequate agricultural output in the nation.
The report read in part, “Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation.
“Per-capita growth in Nigeria has stalled, poverty and food insecurity are high, exacerbating the cost-of-living crisis. Low reserves and very limited fiscal space constrain the authorities’ option space.
Against this backdrop, the authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high and inclusive growth is appropriate.”
Amid Nigeria’s current economic difficulties, the report emphasised that on January 12, 2024, the Executive Board of the International Monetary Fund concluded the Post Financing Assessment and endorsed the Staff Appraisal on a lapse-of-time basis. It further stated that Nigeria’s capacity to repay the IMF is adequate.
The IMF also expressed optimism, noting that the new administration had made a strong start in addressing deep-rooted structural issues despite challenging circumstances.
It highlighted the immediate adoption of two policy reforms that its predecessors had avoided—specifically, the removal of fuel subsidies and the unification of official exchange rates.
The report added, “The new CBN team has made price stability its core mandate and demonstrated this resolve by dropping its previous role in development finance. On the fiscal side, the authorities are developing an ambitious domestic revenue mobilization agenda.”