Nigeria’s economy is expected to maintain steady growth in 2026, but the International Monetary Fund (IMF) says millions of citizens are yet to feel the benefits of recent economic reforms as poverty, food insecurity and inflation continue to pose major challenges.
In its latest Article IV consultation on Nigeria, concluded on June 1, 2026, the IMF projected that Africa’s largest economy will grow by 4.1 percent this year after recording an estimated 4 percent expansion in 2025.
The Fund credited the growth outlook to ongoing economic reforms, stronger foreign reserves and improved macroeconomic stability. However, it cautioned that difficult living conditions remain a reality for many Nigerians despite the progress.
According to the IMF, poverty has climbed to 63 percent based on Nigeria’s national poverty line, while about 27 million people experienced food insecurity during the latter part of 2025.
The report highlights the challenge facing Nigerian authorities as they seek to balance economic reforms with the need to protect vulnerable households from rising living costs.
Inflation, which had been easing for more than a year, accelerated again to 15.4 percent in March 2026 as higher global fuel and food prices filtered into the domestic economy. While the IMF expects inflationary pressures to persist in the short term, it believes the downward trend should resume later in the year.
Nigeria’s external position strengthened considerably in 2025. Gross international reserves rose to US$46 billion from US$40 billion a year earlier, supported by a current account surplus, foreign investor participation in central bank instruments and a Eurobond issuance. Net international reserves also increased sharply from US$23 billion to US$35 billion.
The stronger reserve position provides Nigeria with a larger buffer against external shocks at a time of continued uncertainty in global financial markets and volatility in oil prices.
On the fiscal front, the IMF estimated Nigeria’s consolidated budget deficit at 4.4 percent of GDP in 2025. While non-oil revenue collections broadly met expectations, lower-than-anticipated oil revenues affected government finances.
IMF Executive Directors praised the Nigerian government for reforms that have strengthened economic resilience but stressed that maintaining fiscal discipline will be critical to preserving recent gains. They recommended a neutral fiscal stance in 2026 while safeguarding social and priority spending.
The Fund also welcomed Nigeria’s recent tax reforms, although it noted that additional measures may be required in the medium term to finance expanded social protection programmes, including cash transfers for vulnerable households.
Concerns were also raised about off-budget spending and complex financing arrangements, with the IMF urging authorities to improve transparency, accountability and public financial management.
On monetary policy, the IMF advised the Central Bank of Nigeria to maintain a tight and data-driven approach until inflation is firmly under control. Directors also encouraged further progress toward inflation targeting and clearer policy communication.
The Fund welcomed Nigeria’s commitment to a flexible exchange rate regime but advised authorities to gradually phase out remaining foreign exchange restrictions and reduce dependence on short-term portfolio inflows.
Nigeria’s banking sector was described as resilient, supported by ongoing recapitalisation efforts. Nevertheless, the IMF warned that rising non-performing loans and close links between banks and government debt require careful monitoring. It also called for stronger regulation of stablecoins and other crypto-asset activities.
Looking ahead, the IMF stressed that long-term growth will depend on deeper reforms in governance, security, electricity, agriculture, infrastructure and human capital development.
Crude oil production is projected to increase from 1.64 million barrels per day in 2025 to 1.71 million barrels per day in 2026 and 1.75 million barrels per day in 2027. Public debt is expected to remain relatively stable, although debt servicing costs continue to consume more than half of federal government revenues.
For the IMF, Nigeria’s economic story remains one of progress mixed with significant challenges. While reforms have strengthened stability, boosted reserves and supported growth, high poverty levels, food insecurity, inflation and weak revenue mobilisation continue to threaten inclusive development.
The Fund’s message is clear: reforms are delivering results, but ensuring that those gains translate into improved living standards for ordinary Nigerians remains the country’s biggest task.
