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IMF Warns of Deepening Economic Crisis and Hardship in Nigeria

IMF Warns of Deepening Economic Crisis and Hardship in Nigeria
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The International Monetary Fund (IMF) has issued a warning about Nigeria’s deteriorating economic situation. The IMF expressed concern over the stagnant per-capita growth, widespread poverty, and severe food insecurity, which have exacerbated the ongoing cost-of-living crisis in the country.

These concerns were outlined in a recently published report titled “Review of Nigeria’s Post Financing Assessment by the IMF Executive Board.” According to the report, the inadequate collection of revenue has hindered service delivery and the allocation of resources for public investment.

The report also highlighted the inflationary pressures in Nigeria, with an observed inflation rate of 27 percent in October compared to the same period last year. Food inflation was particularly high at 32 percent. The report attributed this growth to the removal of fuel subsidies, the depreciation of the exchange rate, and the negative impact on agricultural production.

The report emphasized the challenging external environment and the domestic challenges Nigeria faces. It mentioned the scarcity of external financing, the surge in global food prices due to conflict and geo-economic fragmentation, and the stalled per-capita growth, high poverty levels, and food insecurity. Low reserves and limited fiscal space further constrain the options available to the authorities. The report commended the authorities for their focus on restoring macroeconomic stability and creating conditions for sustained, high, and inclusive growth.

Amidst these economic challenges, the report highlighted that on January 12, 2024, the IMF’s Executive Board completed an evaluation of post-financing and promptly approved the Staff Appraisal. It also emphasized Nigeria’s capability to repay its debts to the IMF, providing some reassurance in the midst of the current economic difficulties.

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