IMF Warns of Structural Risks, Nigeria Sees Recovery

One of the takeaways from the 2025 Spring Meetings of the World Bank and the International Monetary Fund (IMF) was the gap between Nigeria’s economic self-assessment and that of the Bretton Woods institutions. While Nigerian officials painted a picture of resilience and recovery, the IMF and World Bank expressed caution, citing persistent inflation, rising debt, and sluggish reforms, reports Festus Akanbi

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lthough the 2025 Spring meetings of the two leading global financial institutions, the World Bank and the International Monetary Fund (IMF), ended last week in Washington, DC, United States, the echoes of the review and the outlook of the global economy are still reverberating in Nigeria.

For the Nigerian delegation led by the Coordinating Minister of the Economy and Minister of Finance, Wale Edun, and Central Bank Governor, Olayemi Cardoso, Nigeria currently, and in the immediate future, has what it takes to turn its economy around.

Speaking at a joint media briefing on the last day of the 2025 meetings, Edun and Cardoso presented a bullish outlook for the country, highlighting macroeconomic reforms, improved investor confidence and expressed optimism for an ambitious growth target of seven per cent.

The CBN governor further disclosed that the gap between the official and parallel market exchange rates had disappeared, while speculative arbitrage, a persistent source of currency pressure in past years, had also vanished.

“This renewed stability has restored confidence and spurred autonomous inflows through formal channels. These inflows are diversifying our foreign exchange sources beyond oil,” Cardoso said.

In his remarks, Edun confirmed that critical economic indicators were now trending positively, noting a clear break from the precarious conditions that existed a few years ago.

Edun added: “Nigeria’s reform efforts are strongly appreciated by the international community as the most credible way to economic prosperity.”

However, reports from the World Bank and the IMF appear to be saying a different thing about the Nigerian economy, with the multilateral institutions saying Nigeria is producing more poor people.

Since he assumed power, President Bola Tinubu has introduced sweeping socio-economic reforms, which the government said were aimed at fixing the economy and redirecting it on the path of growth. These include the removal of fuel subsidies and the unification of exchange rates, among others. The ripple effects of the policies have been severe on many Nigerians, amid elevated food prices and sundry inflationary pressures, triggering hunger and poverty protests across sections of the country.

 Moderate Growth

While Edun and Cardoso beat their chests that Nigeria has weathered its most turbulent storms and is now firmly on a path towards growth and stability, the World Bank predicted that growth in Nigeria is expected to remain moderate in the coming year.

The World Bank projects that headline inflation will ease to 22.1 per cent in 2025, down from 26.6 per cent in 2024, with further moderation to 15.9 per cent by 2027. These forecasts are based on adjusted CPI figures following the rebasing exercise by the National Bureau of Statistics in January 2025.

However, the IMF offers a less optimistic outlook, projecting inflation to average 26.5 per cent in 2025 and spike to 37.0 per cent in 2026. The Fund attributes the stubborn inflation to structural inefficiencies, a weak supply response, and exchange rate volatility despite ongoing reforms.

The World Bank projected that Nigeria’s economy will grow by 3.6 per cent in 2025, building on an estimated expansion of 3.4 per cent in 2024, as key macroeconomic reforms begin to stabilise the business environment.

The bank’s latest economic forecast, which is contained in the Spring 2025 edition of Africa’s Pulse, reflects a more optimistic view than that of the International Monetary Fund, which revised Nigeria’s 2025 growth rate downward to 3.0 per cent in its April 2025 report.

According to the World Bank, the projected recovery is anchored on improved performance in non-oil sectors, notably financial services, telecommunications, information technology, and a gradual rebound in oil production, which is expected to align with Nigeria’s OPEC+ quota.

The multilateral lender anticipates that the country’s economic growth will further strengthen to 3.8 per cent by 2027, assuming current reforms are sustained.

The report stated, “Economic growth is expected to remain moderate in Nigeria. It is expected to increase from 3.4 per cent in 2024 to 3.6 per cent in 2025, and slightly increase to 3.8 per cent in 2026–27.

On the issue of Nigeria’s current account position, the World Bank projects that the current account surplus will rise slightly from 9.2 per cent of GDP in 2024 to 9.4 per cent in 2026. This outlook is underpinned by lower imports, increased remittances, and higher oil exports.

The IMF, however, forecasts a narrowing of the surplus to 6.9 per cent in 2025 and 5.2 per cent in 2026, warning that prolonged oil prices below Nigeria’s fiscal breakeven of $60 per barrel could undermine the external balance.

Poverty on the Increase

The World Bank believes Nigeria is now home to 15 per cent of the world’s extremely poor people. An analysis of its Africa Pulse report, unveiled during the Spring Meetings, revealed that more than 106 million Nigerians currently live on less than $2.15 per day, the global benchmark for extreme poverty.

This places Nigeria at the centre of the global poverty crisis, despite being Africa’s largest economy by gross domestic product.

According to the bank’s projections, Nigeria’s poverty rate is expected to increase by 3.6 percentage points between 2022 and 2027, despite temporary improvements in sectors such as telecommunications and financial services.

Among the four countries, the report identified Nigeria as the single largest contributor to extreme poverty in the sub-Saharan Africa region, with about 19 per cent, followed by the Democratic Republic of Congo (14 per cent), Ethiopia (9 per cent), and Sudan (6 per cent).

This means that about 106.4 million of the 560 million extreme poor in Sub-Saharan Africa reside in Nigeria, which further accounts for 15 per cent of the global total.

It warned that poverty in resource-rich and fragile economies, such as Nigeria, would worsen unless decisive structural reforms are urgently implemented.

According to the bank’s projections, Nigeria’s poverty rate is expected to increase by 3.6 percentage points between 2022 and 2027, despite temporary improvements in sectors such as telecommunications and financial services.

Preventing Further Slide into Poverty

In his reaction, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the federal government should take bold steps to address the key drivers of poverty to prevent the gloomy prediction by the World Bank from coming to pass.

According to him, “This kind of statement from the World Bank can only be conditional, because if the government does the right things, then the situation will not be as gloomy as it has been presented.

“If the government can address the key drivers of poverty, then the poverty situation may not deteriorate beyond what it is. If anything, it could be reversed. We have seen it done in other countries like China, where a lot more people have been taken out of poverty because of the kind of policies and governance that are in place.”

He believes that the first step is to address the rising cost of living. He was referring to the costs of food, energy, transportation, logistics and many other basic things that the poor consume.

“It is the increasing cost of living that makes a lot of people drop into poverty. If we can moderate the costs, then many more people will be able to live above the poverty line. These variables I mentioned are the critical issues as far as the cost of living is concerned,” he stated, adding that the second thing is to address the macroeconomic management dimensions of the drivers of poverty.

“Another point is that the government should address the issue of productivity because when we have an economy where productivity is an issue, it affects everybody, both the small and large businesses. Because productivity determines the ability to be able to create wealth, to create value. It determines how much effort we need to put in to achieve a particular outcome,” Yusuf said.

On its part, ActionAid Nigeria, a group working to end poverty and injustice, challenged the government to fully strengthen and expand social protection, including universal cash transfers and food support for the most vulnerable. They also called for the protection of smallholder farmers by tackling insecurity and ensuring access to markets, inputs, and tools to boost local food production.

The organisation also calls for massive support for small and medium-sized enterprises (SMES), and improving access to finance, which it said can also stimulate job creation. It also calls for investment in agricultural infrastructure, provision of modern farming techniques, and facilitation of market access, saying lessons can be drawn from countries like Niger, where strong growth in the agricultural sector is projected to reduce extreme poverty from 45.3% in 2024 to 35.8% by 2027.