…projects inflation to hit 37% in 2026
…cuts growth outlook
…urges vigilance as oil demand declines
…Edun commends Fund
The International Monetary Fund (IMF) has said that Nigeria’s return to the international debt market in late 2024 marked a notable shift in investor sentiment towards frontier economies, buoyed by the bold macroeconomic reforms and improved credit profiles implemented by the Federal Government.
Also, The Fund yesterday at the ongoing 2025 Spring Meetings of the IMF and the World projected that Nigeria’s inflation may hit 37 per cent in 2026.
Similarly, it noted that the drop in demand for Nigeria’s oil posed a challenge to both her revenue and sovereign risk.
These developments came on a day Nigeria’s economic growth projections for 2025 and 2026 were revised downwards.
Meanwhile, in a report released yesterday, Global Financial Stability Report (GFSR), commended Nigeria’s return to the international debt market in late 2024.
Commenting on sub-Saharan Africa, it noted: “Growth is expected to decline slightly from four per cent in 2024 to 3.8 per cent in 2025 and recover modestly in 2026, lifting to 4.2 per cent.
,,”Among the larger economies, the growth forecast in Nigeria is revised downward by 0.2 percentage point for 2025 and 0.3 percentage point for 2026, owing to lower oil prices.”
It added that Inflation remained a significant hurdle for Nigeria. Consumer prices surged by 33.2 per cent in 2024 while it projects 26.5 for 2025 and 37 per cent for 2026.
“Projections suggest a decline to 13.3 per cent in 2025 and a further slight decrease to 12.9 per cent in 2026 for sub-Saharan Africa overall.
On a more positive note, it said that Nigeria’s current account balance is projected to show a surplus, although declining from 9.1 per cent of GDP in 2024 to 6.9 per cent in 2025 and 5.2 per cent in 2026.
“This surplus offers some protection against external economic shocks for Nigeria.
Looking at the broader SSA region, growth is expected to decline slightly from 4.0 per cent in 2024 to 3.8 per cent in 2025 before a modest recovery to 4.2 per cent in 2026.
It, however, noted: “Sovereign eurobond spreads for frontier economies narrowed in 2024 and at the start of 2025, with macro financial reforms, progress on debt restructuring, and credit rating upgrades in several countries all having contributed to this narrowing.
“Examples include progress on debt restructuring in Ethiopia and Ghana, and foreign exchange market reforms in Nigeria.
“Frontier economies were able to issue foreign currency debt at relatively modest yields, with total issuance during the first quarter of this year amounting to roughly half of total issuance in 2024.
“Nigeria returned to the Eurobond market in late 2024 for the first time since 2022 and Egypt returned in January 2025 for the first time since early 2023.”
The Fund also commended Nigeria’s recent macroeconomic reforms, particularly its foreign exchange liberalisation, as contributing to improved investor sentiment.
However, the Fund also cautioned that growing volatility in global financial markets may pose renewed challenges for the West African economy.
The Fund has projected that Nigeria’s headline inflation will average 26.5 per cent in 2025, following a recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).
The inflation rate, although down from 33.2 per cent in 2024, is expected to spike again to 37.0 per cent in 2026.
This forecast is contained in the IMF’s April 2025 World Economic Outlook (WEO), which paints a cautious picture of Nigeria’s macroeconomic prospects amid reform-driven adjustments and external volatility.
Despite a temporary slowdown in inflation, the Fund warns that price stability remains elusive.
It noted that Nigeria’s growth downgrade reflected growing global uncertainties and sustained weaknesses in oil prices that continue to weigh heavily on Africa’s largest economy.
According to the April 2025 edition of the World Economic Outlook (WEO), Nigeria’s growth is now expected to grow by 3.0 per cent in 2025 and 2.7 per cent in 2026 down from its WEO forecasts of 3.2 per cent and three per cent, respectively, issued in January.
The Fund attributed the downgrade to a mix of domestic challenges and worsening global conditions, including trade tensions, slowing demand from advanced economies, and a sharp decline in crude oil prices.
The downgrade marks a reversal from the estimated 3.4 per cent growth Nigeria achieved in 2024, suggesting that the initial post-pandemic recovery momentum may be losing steam.
The IMF, however, warned that without robust policy responses, Nigeria may struggle to maintain macroeconomic stability in the face of external headwinds.
Furthermore, it noted that growth across Sub-Saharan Africa is projected to ease slightly, dipping from four per cent in 2024 to 3.8 per cent in 2025, before staging a modest rebound to 4.2 per cent in 2026.
Speaking at the press briefing of WEO, Economic Counsellor and Director Research Department, IMF, Pierre-Olivier Gourinchas, said: “Regional growth in Sub Saharan Africa improved significantly last year to four per cent and it will ease in 2025 and this is in line with a softer global outlook.
And so, we are seeing the same forces at play in the region as we are seeing more globally, and a downturn in the downward revision and no projection that is of the similar magnitude at about 0.4 percentage points.”
Also, in a separate report released yesterday, Global Financial Stability Report (GFSR), it noted that Nigeria’s return to the international debt market in late 2024, its first eurobond issuance since 2022 marked a notable shift in investor sentiment towards frontier economies, buoyed by macroeconomic reforms and improved credit profiles.
It states: “For sub-Saharan Africa, growth is expected to decline slightly from 4 percent in 2024 to 3.8 per cent in 2025 and recover modestly in 2026, lifting to 4.2 per cent.
“Among the larger economies, the growth forecast in Nigeria is revised downward by 0.2 percentage point for 2025 and 0.3 percentage point for 2026, owing to lower oil prices.”
It adds that inflation remains a significant hurdle for Nigeria. Consumer prices surged by 33.2 per cent in 2024 while it projects 26.5 for 2025 and 37 per cent for 2026. Projections suggest a decline to 13.3 per cent in 2025 and a further slight decrease to 12.9 per cent in 2026 for Sub-Saharan Africa overall.
On a more positive note, it noted that Nigeria’s current account balance is projected to show a surplus, although declining from 9.1 per cent of GDP in 2024 to 6.9 per cent in 2025 and 5.2 per cent in 2026. This surplus offer some protection against external economic shocks for Nigeria.
Looking at the broader Sub-Saharan Africa region, growth is expected to decline slightly from 4.0 per cent in 2024 to 3.8 per cent in 2025 before a modest recovery to 4.2 per cent in 2026.
Speaking at G-24 press briefing, First Vice-Chair and Minister of Finance and Coordinating Minister of the Economy, Wale Edun, commended the IMF for standing ready to providing safety net and helping countries navigate outcomes of the global uncertainties triggered by the U.S. tariffs and fall in the international prices of oil.
Edun said: “IMF continue to encourage good policy making, to encourage resilience, building of resilience, building of buffers, and effectively stay in the course for those who actually on a path to growth, development and reduction in poverty.”
Director, G-24 Secretariat: Iyabo Masha, said: “We believe that the organizations are very useful, and the usefulness is very much appreciated, and so we don’t have any uncertainty about the continued relevance.
And we do hope that whatever actions countries are taking, the advanced economies are taking, they will factor into their decision the very good usefulness of these organisations.”
