Poverty Persists Despite Nigeria’s Reforms Gains; But Don’t Reintroduce Subsidy – IMF Tells Tinubu
The International Monetary Fund (IMF) has urged the federal government to maintain a neutral fiscal stance in 2026, warning that poverty and food insecurity could worsen despite improvements in Nigeria’s macroeconomic stability.
In its 2026 Article IV consultation report released on Tuesday, the Washington-based lender said reforms implemented over the past three years have strengthened economic resilience, but cautioned that higher global fuel and food prices pose fresh risks to inflation and living standards.
“Strong reforms over the past three years have yielded improved macroeconomic outcomes and built resilience. Still, conditions for many Nigerians remain difficult. Poverty reached 63 percent (national poverty line) and 27 million Nigerians are estimated to have faced food insecurity in the fall of 2025,” the IMF said.
The fund projected Nigeria’s economy to grow by 4.1 percent in 2026, compared with an estimated 4 percent in 2025.
IMF also warned that inflationary pressures remain elevated after consumer prices rose to 15.4 percent in March.
“After being on a declining trend for over a year, inflation nudged up to 15.4 percent year-on-year in March 2026 as the jump in international fuel and food prices started hitting Nigeria,” the fund said.
IMF said fiscal policy in 2026 should prioritise macroeconomic stability while protecting growth-enhancing investments and social spending.
The Bretton Woods institution advised the government to resist election-related spending pressures and maintain its commitment not to reintroduce fuel subsidies.
‘CONCERNS OVER COMPLEX $5BN CURRENCY SWAPS
The fund expressed deep concern regarding a proposed $5 billion total return swap with an international bank included in the draft 2026 budget framework.
According to the IMF, the transaction would require the government to post 133 percent collateral in domestic securities, exposing it to margin calls if the naira depreciates.
“The arrangement exposes the government to margin calls if the fx value of the naira securities drops (naira depreciation, higher interest rates) and could thus give rise to political constraints on monetary or exchange rate policy,” the institution warned.
The fund also expressed concerns about the use of complex financing arrangements, warning that such instruments could expose public finances to additional risks.
“Staff cautions that complex financing instruments that involve high collateral and possible margin calls introduce additional fiscal risks and could give rise to political constraints on monetary or exchange rate policy,” the IMF said.
Furthermore, the Bretton Woods institution urged the federal government to keep capital expenditure goals realistic.
On monetary policy, the IMF backed the Central Bank of Nigeria’s (CBN) tight stance, saying positive real interest rates remain appropriate amid persistent inflation risks.
The lender also urged authorities to maintain a flexible exchange rate regime, reduce reliance on short-term portfolio inflows, phase out remaining exchange restrictions, and continue reforms aimed at attracting foreign direct investment (FDI).
IMF added that reforms in governance, security, electricity, agriculture, infrastructure and human capital development remain critical to achieving stronger and more inclusive growth.
