The International Monetary Fund (IMF) has warned that Nigeria must urgently review its 2025 national budget to prevent a deepening fiscal crisis, citing concerns over revenue shortfalls, rising debt obligations, and costly subsidies.
In its latest country assessment released on Wednesday, the IMF called on Nigerian authorities to adopt a more realistic fiscal framework that aligns with the country’s current economic realities, particularly in light of declining oil revenues and mounting public expenditure.
“There are significant downside risks to Nigeria’s fiscal outlook in 2025,” the report states. “A timely budget review, supported by credible policy measures, is essential to maintain macroeconomic stability and avoid deeper imbalances.”
Key Concerns: Subsidies and Debt
The IMF highlighted fuel and electricity subsidies as major drains on government resources, warning that without structural reforms, they could crowd out critical investments in infrastructure, education, and healthcare.
Public debt, which now consumes more than 70% of federally retained revenue, also poses a growing threat. The IMF is urging the government to strengthen domestic revenue mobilization through tax reform and reduce non-essential spending.
Economic Outlook Hinges on Policy Shift
Despite modest gains in non-oil sectors and stabilizing inflation, Nigeria’s economic growth remains below potential. The IMF noted that unless urgent action is taken, rising financing needs could lead to increased borrowing at unsustainable terms or further currency pressure.
“The 2025 budget assumptions are overly optimistic,” said Maria Gonzalez, the IMF’s mission chief for Nigeria. “The government must take difficult but necessary steps to realign its spending with available resources.”
Nigerian Government Response
In response, officials from Nigeria’s Ministry of Finance acknowledged the IMF’s recommendations and indicated that a mid-year budget review is already under consideration.
“We are aware of the global and domestic fiscal challenges, and we are actively engaging with stakeholders to ensure a balanced and responsible fiscal trajectory,” a ministry spokesperson told [Publication Name].
As the country prepares for a potential supplementary budget debate in the National Assembly, economists say the next few months will be critical in determining whether Nigeria can avoid a deeper economic downturn.
