IMF: Tinubu’s economic reforms stabilising Nigeria, yet 63% of citizens stuck in poverty
The International Monetary Fund (IMF) has acknowledged that Nigeria’s sweeping economic reforms have strengthened macroeconomic stability and restored investor confidence. However, the Fund warned on Tuesday that these macro-level benefits are yet to trickle down to millions of struggling citizens.
In its latest Article IV consultation review, the IMF noted that the bold policy shifts initiated since 2023 under President Bola Tinubu—specifically the removal of the petrol subsidy, aggressive monetary policy tightening, and the liberalisation of the foreign exchange market—have successfully rebuilt economic buffers and improved fiscal management.
Despite these gains, the global lender cautioned that the reforms are simultaneously driving severe social strain, highlighting a massive disconnect between positive economic indicators and the harsh realities faced by Nigerian households.
Macro success vs. household hardship
While the structural changes have started to steady the economy, the IMF pointed out that the immediate fallout has worsened the cost-of-living crisis. Poverty levels in Nigeria remain staggering at 63%, with millions of citizens currently facing acute food insecurity.
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While higher global crude prices could boost revenue for Africa’s top oil exporter, the IMF warned they also drive up domestic fuel and food costs, further worsening inflation and poverty pressures.
The IMF warned that Nigeria’s fragile economic recovery could easily be derailed by global disruptions, including the ongoing conflicts in the Middle East.
Forex reserves hit 17-year high, but risks loom
On the financial front, the IMF praised Nigeria’s improved policy credibility, noting that a better-functioning forex market has allowed the country to regain access to international capital markets and lower its risk premiums.
According to the Central Bank of Nigeria (CBN), the nation’s gross foreign reserves have surged to $50 billion—the highest level witnessed in 17 years.
However, the IMF raised a red flag over the nature of the capital entering the country.
Data from the National Bureau of Statistics (NBS) reveals that volatile foreign portfolio investments (“hot money”) accounted for a staggering 95% of the $10.37 billion in total capital inflows during the first quarter of the year.
The IMF strongly urged the federal government to pivot away from a heavy reliance on these short-term portfolio investments, which carry high rollover risks, and instead focus on attracting more stable, long-term Foreign Direct Investment (FDI) to create jobs and build infrastructure.
Looking ahead, the IMF maintains a relatively positive outlook for Nigeria’s economic output. The Fund projects the economy will grow by 4.1% this year, with economic expansion expected to accelerate to 4.3% by 2027.
