IMF report flags Nigeria's fiscal opacity as interest payments eat 53% of revenue
The IMF's 2026 Article IV Consultation report on Nigeria reveals troubling fiscal practices despite macroeconomic gains. Last year's expansionary government spending was partly financed by a CBN deposit drawdown of 1.1% of GDP—which has the same liquidity impact as the controversial 'ways and means' overdraft financing. Crucially, the estimated savings from fuel subsidy removal (up to 2% of GDP) do not appear to have accrued to the 2025 budget.
More alarmingly, interest payments consumed about 53% of federal revenue last year, severely limiting fiscal space for essential services. The report also notes a fiscal 'statistical discrepancy' of 2.7% of GDP, suggesting spending may not be fully captured in published accounts, and points to increased off-budget spending and weak fiscal reporting.
While Nigeria's external position improved (current-account surplus of 4.8% of GDP, gross reserves up from $40B to $46B), and inflation numbers improved in 2025, the IMF stresses that macroeconomic stability hasn't translated to better living standards. Poverty and food insecurity remain significant challenges as the Tinubu government's reform momentum faces pressure from upcoming elections.
Will Nigerians see tangible improvements in their daily lives from these macroeconomic gains, or will fiscal opacity and high debt servicing continue to undermine development prospects?