The International Monetary Fund (IMF) has warned the Federal Government of Nigeria to remain vigilant in the face of mounting global trade tensions and tightening financial conditions, cautioning that Nigeria’s earnings from commodity exports could decline significantly if global demand weakens.
According to the report by Punch newspaper on Thursday, the warning was issued during the Global Financial Stability Report press briefing held on April 22, 2025, at the ongoing IMF/World Bank Spring Meetings in Washington, DC.
The report explained that this came as the Federal Government of Nigeria said that it would prioritise the payment of salaries, pensions, debt servicing, and national security obligations as Nigeria contends with dwindling revenues and rising fiscal pressure.
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, who spoke on Tuesday at the Nigerian Investor Forum held on the sidelines of the ongoing Spring Meetings of the International Monetary Fund and World Bank in Washington, DC, said that the Nigerian government was committed to maintaining fiscal discipline by cutting waste, conserving resources, and aligning spending with actual revenue.
“What do you do when your budget revenue is below expectation?” he said. “You have to come back down, conserve, and prioritise. That’s exactly what we have to do to ensure we maintain fiscal congruence.”
Edun also disclosed that a forensic audit of the Nigerian National Petroleum Company Limited (NNPCL) is currently underway. The audit follows months of scrutiny over the financial conduct of the company, including its controversial N2.7tn fuel subsidy refund claim currently under review by government auditors.
Speaking at the Financial Stability Report press briefing, the Assistant Director in the IMF’s Monetary and Capital Markets Department, Jason Wu, acknowledged that Nigeria’s macroeconomic indicators had shown some resilience in recent months, supported by ongoing reforms and an improved policy framework.
He noted that Gross Domestic Product growth had remained steady and inflation had shown signs of easing.
“In the case of Nigeria, macroeconomic performance has held up, GDP growth has been fairly consistent, and inflation has been coming down,” Wu said.
He attributed part of the progress to policy reforms implemented by Nigerian authorities, including the liberalisation of the exchange rate regime.
“Earlier this year, we saw Nigeria’s sovereign credit spreads lowering. I think the reforms that the authorities have done, including the liberalisation of exchange rates, have helped in that regard,” he said.
Despite the progress, Wu cautioned that Nigeria remains exposed to external vulnerabilities, especially as global financial markets face heightened uncertainty and investor risk appetite weakens.
“This is when we might see increases in sovereign spreads that will challenge the external picture for Nigeria,” Wu warned. “Nigeria’s sovereign spread has increased in recent weeks as stock markets globally have declined.”
He stressed that the country’s heavy reliance on commodity exports made it particularly vulnerable to trade disruptions and geopolitical developments that affect global demand for oil and gas.
“If trade tensions are going to lead to lower global demand for commodities, this will obviously weigh on the revenue that they will receive,” Wu said. “Both of those developments would counsel that authorities remain quite vigilant to these developments and take appropriate policies to counter them.”
GIK/APA