The International Monetary Fund’s 2026 Article IV Consultation with Nigeria paints a picture of an economy that has turned a corner financially but remains a long way from delivering for its people. For the average Nigerian, this is hardly news. The report’s core message—that stabilization has largely succeeded, but living standards have yet to catch up—echoes what many have felt for years.
But the IMF’s analysis is not straightforward. It is a carefully worded document, laden with nuance that raises troubling questions. Consider its mention of a “CBN deposit drawdown of 1.1 per cent of GDP” used to finance last year’s fiscal expansion. This, the report notes, has the same liquidity impact as the old “ways and means” overdrafts. Or the admission that the savings from removing the fuel subsidy—estimated at up to 2 per cent of GDP—appear not to have reached the budget in 2025. Did Nigeria simply revert to monetizing its deficit? Or, as some analysts suggest, did the government borrow to cover the subsidy’s cost, and then keep borrowing for other expenses after its removal? Transparency, it seems, remains elusive.
The IMF flagged deep concerns about opaque financial arrangements. Off-budget spending rose last year. Government financing was too “complex” even for the fund’s experts. Fiscal reporting stayed weak. And a “statistical discrepancy” of 2.7 per cent of GDP suggests spending may not be fully captured in official accounts. More alarming still: the Federal Government’s interest payments consumed about 53 per cent of its revenue last year. That is a heavy burden, even if not yet at crisis levels.
On the positive side, Nigeria’s external position has improved. A current-account surplus of 4.8 per cent of GDP and gross reserves rising from US$40 billion to US$46 billion signal greater stability. Inflation eased in 2025, reflecting better monetary policy and base effects. But the Third Gulf War has triggered global fuel and food shocks, threatening a resurgence of inflation if policy is not kept tight.
Yet the report’s comparisons are mostly against Nigeria’s own past, not its peers. Setting the bar low enough, almost any performance can look good. The real challenges—poverty, food insecurity, weak public revenues—remain largely unaddressed. The IMF notes that revenue, at just 10 per cent of GDP, is too low for a country with Nigeria’s development needs. While better tax collection and higher VAT are welcome, the elephant in the room is government spending. The Tinubu administration has largely ignored the need to prune expenditure and make the economy more efficient.
The report also warns of two risks tied to the upcoming presidential election: rising poverty and food insecurity could fuel demands for higher spending, while reform momentum may stall as the vote approaches. For the government’s supporters, the message is clear: inflation and reserves are not the main hurdles. The gap between improving macroeconomic numbers and persistent hardship must be bridged. Without more inclusive growth and sounder public finances, the political sustainability of these reforms could come under severe pressure.
