On the IMF’s 2026 Article IV Consultation, By Uddin Ifeanyi

The IMF’s staff report on its 2026 Article IV Consultation with Nigeria is a very political document — mealy-mouthed, even, if one of the persons I discussed the report with, last week, is to be taken seriously. What is a reader to make of the report’s claim that the expansionary consolidated government fiscal stance last year was financed in part by “a CBN deposit drawdown of 1.1 per cent of GDP which has the same liquidity impact as previous ‘ways and means’ (overdraft) financing”? Or that as at the time of the report’s presentation, “the estimated savings of the fuel subsidy removal completed in late 2024 (estimated at up to 2 per cent of GDP) do not appear to have accrued to the budget in 2025”? Did we revert, last year, to monetising part of the federal government’s deficit? And are our public finances any more transparent than they have previously been? Or, if my conversers are to be believed, the country simply borrowed to finance the fuel subsidy. With the subsidy’s elimination, we simply have continued to borrow to pay for other things. Accruals to the budget? In your dreams!

The fund raised plenty of concerns about opaque financial arrangements, and its consequences (not good, obviously) for the economy. Off-budget spending appears to have increased last year. Government’s financing arrangements were too “complex” for the boffins at the fund (no chance, therefore, of the famed Nigerian on the street making any sense of these numbers). And fiscal reporting remained weak. Should it matter that last year, the IMF estimates a fiscal “statistical discrepancy” of 2.7 per cent of GDP — and how should it matter? The obvious implication, that spending may not have been fully captured in published fiscal accounts is worrying. But is this as big a source of concern as the fact that last year, the federal government’s interest payments used up about 53 per cent of federal revenue?

All of this is to quibble, I am told. Up to a point, the ratio of interest payments to public revenue may be a major constraint on spending, but it is not at debt-crisis levels. Besides, on balance, the report is a positive one. The country’s improved external position (a current-account surplus of 4.8 per cent of GDP last year, and gross reserves up from US$40 billion to US$46 billion) is both the result and cause of a much more stable economy. If this stability improves investor confidence over the long term, we are, at least, witnessing upfront evidence that it is renewing the economy’s access to international capital markets. Better inflation numbers in 2025 cuts several ways. On one hand, the numbers both evidences better monetary policy management and the working out of the base effect. On the other hand, the global fuel and food shocks this year, in the wake of the Third Gulf War, invite an even tighter policy stance all through this year if inflation is not to make a vengeful return.

The appeal of the adjectives “good”, “bad”, “better” and “worse”, is that they are relative constructs. Invariably, the relevant comparators matter even more. And in the case of the fund’s report, the Nigerian economy is not being compared to its peers, with whom it must compete for scarce loans and investment funding. Much of the comparison is against domestic practice three years ago. Set the cut-off bar sufficiently low enough, and just about every Tunde, Okoro and Mohammed will make the grade. Ask the Joint Admission and Matriculation Board (JAMB). Much work still remains to be done, then, on poverty and food insecurity as the report concedes. As with government’s finances, too.

Here, the assumption of low government revenues is an easy one. Estimated at only about 10 per cent of GDP, Nigeria’s consolidated government revenue, the IMF thinks, is insufficient for a country with our development needs. Sure, better tax administration is welcome. As are both broader tax collection, and ultimately higher VAT and other tax measures. But what about pruning government spending? The expenditure side of the reforms needed to make the Nigerian economy both more efficient and productive has been largely conspicuous for being ignored by the Tinubu government. Accordingly, the fund does well to draw attention to the two risks posed by the forthcoming presidential elections: rising poverty and food insecurity may increase pressure on government for higher public spending; and the reform momentum could slow as elections approach.

In a qualified sense, the fund’s report presents a picture of an economy that is stronger financially, today, than it was three years ago, but not yet strong socially. Put this way, the IMF’s report simply reinforces something the average Joe on Nigeria’s streets has known about the economy for some time now: “The stabilisation phase has largely succeeded, but Nigeria now needs to convert macroeconomic gains into improvements in living standards.”

For boosters of the Tinubu government, it helps to underline the fact that inflation is not the main barrier that managers of the Nigerian economy must hurdle. Neither is it about the building up of reserves, nor management of the administration’s bulimia for binge borrowing. The gap between improving macroeconomic indicators and persistent poverty, food insecurity, and weak public revenues has to be bridged sustainably. Absent more inclusive growth and the fixing of government’s finances, the political sustainability of the Tinubu government’s much-vaunted reforms could come under severe pressure.