IMF Urges Nigeria to Cut 2025 ₦54.99 Trillion Budget Amid Falling Oil Prices and Inflation Concerns
Written (By Springnewsng Media Limited, July 2, 2025):
The International Monetary Fund (IMF) has advised the Nigerian government to revise its proposed ₦54.99 trillion 2025 budget downward due to declining global oil prices, warning that failure to adjust spending could worsen the country’s fiscal deficit and increase debt levels.
In its latest Article IV Consultation Report released this week, the IMF commended Nigeria’s recent economic reforms—including the removal of fuel subsidies, cessation of Central Bank deficit financing, and liberalisation of the foreign exchange (FX) market—but emphasized that more work is needed to sustain the recovery and safeguard economic stability.
According to the IMF, the 2025 budget should be restructured to reflect the realities of a weaker oil price environment and maintain a neutral fiscal stance that prioritizes growth-driven investments. “The 2025 budget needs to be recalibrated to lower oil prices,” IMF directors noted, adding that current spending levels could push the fiscal deficit from 4.1% to around 4.7%.
The IMF cautioned that Nigeria remains vulnerable to external shocks, particularly falling oil prices or rising international borrowing costs, which could disrupt the country’s fragile economic gains, weaken foreign reserves, and put pressure on the naira exchange rate.
Oil continues to dominate Nigeria’s economy, accounting for the majority of export earnings and government revenues. While recent improvements in oil production helped Nigeria achieve 3.4% GDP growth in 2024, the IMF noted that this growth remains inadequate in per capita terms, with high inflation, rising poverty, and worsening food insecurity still affecting millions.
For 2025, the Fund projects another 3.4% GDP growth, driven by better crude output, the launch of a new domestic refinery, and a resilient services sector.
On monetary policy, the IMF endorsed the Central Bank of Nigeria’s tight stance, stating, “The CBN is appropriately maintaining a tight monetary policy stance, which should continue until disinflation becomes entrenched.”
Inflation dropped from an average of 31% in 2024 to 22.97% year-on-year in May 2025 but remains among the highest globally. The IMF stressed that keeping real interest rates positive is essential to ensure price stability and build credibility in the exchange rate system.
The Fund also praised the ongoing FX reforms that have improved price transparency and liquidity in the market, but it urged the Nigerian government to adopt a more structured intervention strategy to ensure long-term stability.
