The International Monetary Fund (IMF) has warned that Nigerians may experience worsening economic conditions in the near term as rising food and transportation costs continue to strain household incomes, even as higher global oil prices offer prospects for increased government revenue.
Speaking during a press briefing on the regional economic outlook at the ongoing World Bank/IMF Spring Meetings in Washington, DC, Director of the IMF African Department, Abebe Selassie, said global shocks linked to geopolitical tensions—particularly the Middle East crisis—are already pushing up living costs across Sub-Saharan Africa, including Nigeria.
According to Selassie, higher fertilizer costs and rising transportation expenses are contributing to increased food prices, worsening pressure on households in both urban and rural communities.
“We’re already seeing quite a lot of increase in transportation prices that people are facing. Transportation costs are very high for people in urban areas, rural areas even more so,” he said, adding that the situation is making life increasingly difficult for citizens.
Despite these pressures, Selassie urged governments to sustain ongoing economic reforms rather than abandon them in response to short-term shocks. He noted that recent fiscal adjustments across several countries, including Nigeria, have helped stabilise deficits and debt levels, providing limited room to manage emerging challenges.
He stressed the importance of prioritising critical expenditures, improving spending efficiency, and strengthening domestic revenue mobilisation through better tax policies and implementation capacity.
Selassie also emphasised the role of stakeholder engagement and transparent communication in navigating difficult fiscal decisions, while highlighting the potential of technology and regional trade integration to strengthen economic resilience over time.
Meanwhile, Nigeria’s fiscal outlook presents a mixed picture. The IMF projected that the country’s debt-to-GDP ratio will rise to 33.1 per cent by 2027, slightly lower than its earlier estimate of 35.3 per cent but still higher than the 32.3 per cent projected for 2026. The projection follows data from the Debt Management Office showing Nigeria’s total public debt rose to N159.27 trillion at the end of the fourth quarter of 2025.
The Fund also warned that global fiscal risks remain elevated, with rising geopolitical tensions likely to increase pressures through higher fuel and food prices, tighter financial conditions, and increased defence spending worldwide.
However, Nigeria may benefit from stronger oil revenues in the short term. The country’s crude grades—Brass River and Qua Iboe—recently traded above $113 per barrel, significantly higher than the $60 benchmark used in the 2026 budget. Analysts say the sustained price increase, driven partly by uncertainty surrounding United States–Iran tensions, could boost government earnings if production levels remain stable.
Even so, experts caution that rising oil prices could also translate into higher domestic fuel costs, potentially worsening inflation and poverty levels if refining and transportation costs increase.
Economic analysts further noted that while Nigeria’s debt-to-GDP ratio appears moderate by global standards, the country’s narrow tax base and large informal economy limit government revenue capacity, making debt servicing a more pressing concern than the headline ratio suggests.
They therefore advised that any oil-revenue windfall should be channelled toward infrastructure development, deficit reduction, and social investments rather than recurrent expenditure, warning that disciplined fiscal management will be critical as the country approaches the 2027 election cycle.
