Urges FG to consolidate fiscal policies

The International Monetary Fund (IMF) has retained its 2025 growth projection for Nigeria at 3.2 per cent, signaling moderate optimism about the country’s economic recovery.

However, the IMF urged Federal Government to strengthen and consolidate its fiscal policies to ensure sustainable growth and public debt sustainability.

In its World Economic Outlook (WEO) published at the weekend titled, Global Growth: Divergent and Uncertain (January 2025), the Washington, USA-based institution said growth in Nigeria was projected to gradually decline in 2026 to three per cent, adding that the 3.2 per cent projection for 2025 pointed to the fact that emerging markets like Nigeria showed relative stability, contributing to the broader growth trajectory.

Also, it said the economic growth forecast for sub-Saharan Africa was retained at 4.2 per cent for 2025, projecting similar growth in 2026.

IMF raised its 2025 growth forecast to 3.3 per cent, up from 3.2 per cent in October 2024, and added that growth for 2026 was also expected to remain at 3.3 per cent.

It said: “The forecast for 2025 is broadly unchanged from that in the October 2024 WEO, primarily on account of an upward     revision in the United States offsetting downward revisions in other major economies.”

The IMF explained that global headline inflation is expected to decline to 4.2% in 2025 and 3.5% in 2026, converging back to the target earlier in advanced economies than in emerging markets and developing economies.

Offering guidance on how to manage inflation, the lender emphasised that monetary policy should aim to restore price stability while also supporting economic activity and employment.

“In economies where inflationary pressures persist and the risk of unexpected increases is high, a restrictive stance should be maintained until there is clearer evidence that inflation is returning to target sustainably.

“In economies in which activity is cooling fast and inflation is on track to durably go back to target, a less restrictive stance is justified. In either case, fiscal policy should consolidate to put public debt on a sustainable path and restore the space needed for more agile responses,” the IMF said.

The lender also stressed the importance of fiscal policy consolidation, recommending that it be aligned with the goal of placing public debt on a sustainable path while creating room for more responsive policy actions.