The International Monetary Fund (IMF) has praised Nigeria’s ongoing economic reforms, describing them as bold measures that have helped stabilise the economy and laid the foundation for future growth. However, it warned that falling oil prices and global economic uncertainty could pose risks to the country’s macroeconomic outlook.
The commendation came at the conclusion of the IMF’s 2025 Article IV Consultation Mission to Nigeria, which ran from April 2 to 15. The delegation, led by Axel Schimmelpfennig, held talks with key officials including Finance Minister Wale Edun, CBN Governor Yemi Cardoso, and representatives from the private sector and civil society.
“The Nigerian authorities have taken important steps to stabilise the economy, enhance resilience, and support growth,” Schimmelpfennig said in a statement. He cited the end of deficit financing by the Central Bank of Nigeria (CBN), removal of fuel subsidies, and improvements in the foreign exchange market as key reforms.
Despite these achievements, the IMF noted that poverty and food insecurity remain high. It advised that macroeconomic policies must continue to strengthen buffers, lower inflation, and foster private sector-led growth.
The IMF also emphasized the need for prudent fiscal management, especially in light of declining oil revenues. It encouraged the government to sustain subsidy savings, protect key investments, and expand social support programs, including World Bank-supported cash transfers.
In response to inflationary pressures, the Fund called for a tighter monetary stance and suggested the adoption of a disinflation path to anchor expectations.
CBN Reports Uptick in Foreign Capital, Trade Surplus in January
In a related development, the CBN’s January 2025 Economic Report showed that Nigeria attracted $2.06 billion in foreign capital, up from $1.57 billion in December 2024, driven largely by increased portfolio investments. Trade surplus also rose to $2.20 billion from $1.06 billion.
Portfolio investment surged to $1.85 billion, from $1.23 billion, mostly due to increased interest in money market instruments. However, Foreign Direct Investment (FDI) dipped to $0.07 billion from $0.12 billion.
The Federal Capital Territory overtook Lagos State in capital importation, accounting for 62.88% of inflows, while Lagos followed with 36.59%. Ogun and Kano states received marginal shares.
Despite the uptick in capital inflows and trade surplus, the federal government’s fiscal deficit widened in January due to declining revenue. Federally collected revenue dropped by 31.35% month-on-month, while retained revenue plunged by 69.19%. However, total expenditure also declined by 15.51%.
Oil, Non-Oil Revenue Decline While Exports Rise
Gross federation account receipts fell to ₦1.94 trillion, down 31.35% from December. Oil revenue declined by 45.45% to ₦0.61 trillion, largely due to reduced Petroleum Profit Tax and royalties amid pipeline issues. Non-oil revenue remained dominant, making up 68.67% of total revenue, but was still 22.18% lower than the previous month.
Despite revenue shortfalls, crude oil and gas exports rose to $4.80 billion in January, up from $3.62 billion, as oil prices climbed to $80.76 per barrel and production increased to 1.54 million barrels per day.
External Reserves and Capital Outflows
External reserves dropped to $38.88 billion at the end of January, from $40.19 billion in December. Nonetheless, they remain above international benchmarks, providing over eight months’ import cover.
Capital outflow rose to $1.20 billion, driven by higher loan repayments and capital reversals. However, dividend repatriation declined by 66.67% to $0.01 billion.
Foreign exchange flows also weakened slightly. Net FX inflow stood at $4.79 billion, down from $5.01 billion in December. While FX inflow through the CBN declined, autonomous inflows rose, reflecting increased confidence in the non-official market.
Outlook: Moderate Inflation, Positive Growth Expected
The CBN projects continued economic growth in 2025, hinging on sustained reforms, especially in the oil and forex sectors. However, it flagged potential risks including insecurity, naira depreciation, and rising living costs.
Inflation is expected to ease in the short term, supported by improved food security, stable fuel prices, and the impact of previous interest rate hikes. Nonetheless, rising money supply and insecurity could undermine this outlook.
