IMF Urges Nigerian Govt to Reassess 2025 Budget Amid Falling Oil Prices

The International Monetary Fund (IMF) has advised the Federal Government of Nigeria to review and recalibrate its proposed 2025 national budget of ₦54.99 trillion, in light of declining global oil prices which may challenge revenue projections.

This recommendation is contained in the IMF’s 2025 Article IV Consultation Report on Nigeria, which was released yesterday in Washington, D.C., United States. The global financial body stressed the need for a more realistic budget framework to align with the current and projected state of the international oil market.

According to the report, Nigeria’s economy is expected to grow by 3.4% in 2025, buoyed by increased oil output, improved food production, and falling inflation. However, it emphasized that the fiscal assumptions in the 2025 budget must reflect these changing economic dynamics.

“The 2025 budget needs to be recalibrated to lower oil prices,” the IMF stated. “Growth has been steady but too low in per capita terms, and inflation remains high. Gains have yet to benefit all Nigerians. Food insecurity and poverty have risen.”

The Fund acknowledged the federal government’s ongoing reforms, particularly in monetary policy and foreign exchange management. It praised the Central Bank of Nigeria (CBN) for recent measures including exchange rate liberalisation, which it said have brought stability to the naira and increased foreign capital inflows.

“Reforms to the FX market and foreign exchange interventions have brought stability to the naira,” the report noted. It highlighted that inflation fell to 23.7% year-on-year in April 2025, down from a 31% average in 2024, thanks in part to improved food supply and naira stabilization.

On monetary policy, the IMF noted: “The Central Bank of Nigeria is appropriately maintaining a tight monetary policy stance, which should continue until disinflation becomes entrenched.”

It also acknowledged progress in recapitalizing the banking sector and commended the discontinuation of deficit monetization, urging continued strengthening of the central bank’s governance as a foundation for eventual inflation targeting.

However, the Fund warned of growing downside risks, including falling oil prices, higher global financing costs, and domestic security concerns.

Read also: Hunger, Inflation Driving Insecurity in Nigeria, Methodist Prelate Warns Tinubu

“A further decline in oil prices or increase in financing costs would adversely affect growth, fiscal and external positions, undermine financial stability, and exacerbate exchange rate pressures,” it said. “A deterioration of security could impact growth and food insecurity.”

The IMF’s Executive Board agreed with the staff report, emphasizing that while Nigeria has made notable progress, the reforms have not yet delivered broad-based benefits to the population. The Board stressed the need for “agile policymaking” to sustain macroeconomic stability and reduce poverty.

“To lift Nigeria’s growth outlook, improve food security, and reduce fragility, Directors highlighted the importance of tackling security, red tape, agricultural productivity, infrastructure gaps—including boosting electricity supply—as well as improved health and education spending,” the Board said.

Reacting to the report, the **Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, affirmed the government’s commitment to proactive management of the economy.

In a statement issued by the Director of Information and Public Relations, Mr. Mohammed Manga, Edun said the government is carefully implementing the 2025 budget to consolidate reform gains and maintain economic stability.

“The government continues to monitor developments in the international oil market and global trade environment and is taking responsive measures to mitigate potential risks while maintaining momentum toward inclusive growth,” Edun stated.

The IMF noted that Nigeria’s medium-term outlook remains moderately optimistic, with GDP growth projected to hover around 3.5%, supported by domestic reforms, increased oil production, and the coming onstream of the Dangote Refinery and other local industrial capacity.

However, the global lender reiterated that Nigeria must accelerate inclusive policy actions to ensure that the benefits of economic growth reach all segments of the population.