The International Monetary Fund has urged the Federal Government to introduce targeted cash transfers and temporary income support for vulnerable households grappling with rising food and energy prices.
The Fund said the interventions could help alleviate poverty and strengthen food security but emphasised that they should be supported by a credible fiscal plan aimed at boosting government revenue and improving the efficiency of public spending.
In its latest global economic projections, the IMF forecast worldwide economic growth of 3.1 per cent in 2026 and 3.4 per cent in 2027. However, it cautioned that escalating energy and commodity prices, increasing public debt and uncertainty surrounding artificial intelligence (AI) could undermine economic performance.
The Fund warned that the outlook remained tilted towards downside risks, noting that further economic disruptions could weaken growth and intensify inflationary pressures.
The warning comes as the IMF raised concerns about the ability of the global economy to withstand mounting pressures, including higher energy costs, rising commodity prices, growing debt burdens and uncertainty over the economic implications of artificial intelligence. It noted that developing countries, including Nigeria, were particularly exposed to these challenges because of their economic vulnerabilities.
Chief of the IMF Research Department’s World Economic Studies Division, Deniz Igan, made the recommendation on Tuesday during a press briefing on the Fund’s October 2026 World Economic Outlook at the IMF/World Bank Annual Meetings in Bangkok, Thailand. She highlighted the importance of addressing food and energy insecurity as part of efforts to ease the rising cost of living in Nigeria and other developing economies.
“In this environment, we advocate cash transfers and targeted, temporary income support for the most vulnerable households in Nigeria,” Igan said.
She added: “Such transfers can help reduce poverty and improve food security. This should be accompanied by a credible medium-term fiscal framework. That framework should focus on improving the quality of public expenditure and strengthening revenue collection.”
Igan maintained that government efforts to provide financial relief to struggling households should be matched by measures to improve revenue generation. She said a combination of targeted support and stronger public financial management would help ensure that social interventions remained sustainable without placing additional strain on government finances.
The recommendation comes against the backdrop of persistent cost-of-living pressures in Nigeria, where households continue to contend with expensive food, energy and other essential commodities. The situation has remained a major concern despite the country’s status as a significant oil-producing nation.
Addressing the implications of oil price increases that are not driven by stronger demand, the IMF’s Economic Counsellor and Director of Research, Silvana Tenreyro, said central banks faced a complex policy challenge in balancing the need to contain inflation against the risk of slowing economic activity. She explained that such oil price shocks could drive inflation higher while simultaneously weakening economic growth, complicating decisions on whether to increase interest rates.
According to Tenreyro, monetary authorities must ensure that inflation remains on course to return to their respective targets, typically over a period of two to three years. However, she said policymakers also needed to consider the potential economic costs of higher borrowing rates, particularly when businesses and households were already under pressure.
She noted that the appropriate monetary policy response would vary from one country to another, depending on prevailing inflation levels, labour market conditions and the extent to which individual economies were exposed to rising energy prices. These factors, she said, would determine how aggressively central banks should respond to inflationary shocks.
Tenreyro also stressed the need for the Nigerian government to tackle rising prices of essential goods, particularly food and energy, while preventing vulnerable households from shouldering a disproportionate share of the economic burden.
“These are essential items and their prices have risen significantly. The question is how to address these pressures while ensuring that the burden does not fall disproportionately on vulnerable households,” she said.
She identified Nigeria as an example of the challenges confronting energy-exporting economies, explaining that higher oil revenues do not automatically translate into lower living costs or improved welfare for citizens. Despite the resilience of economic growth, she observed that many Nigerians continued to face food insecurity and difficulties affording basic necessities.
The IMF’s recommendations are consistent with concerns raised in its latest global economic outlook, which highlighted the risks posed by rising energy and commodity prices, increasing public debt and uncertainty surrounding artificial intelligence. The Fund warned that these factors were testing the resilience of the global economy and could further complicate the outlook for growth and inflation.
Under its projections, global output is expected to expand by 3.1 per cent in 2026, although the balance of risks points towards a weaker performance. The IMF cautioned that additional disruptions to energy supplies could constrain economic activity and fuel inflation, while a potential correction in AI-related investments could trigger financial market volatility and spill over into sectors beyond the technology industry.
For Nigeria, an increase in international oil prices presents both opportunities and risks. Although stronger prices could boost crude oil export earnings and government revenue, they could also raise domestic fuel prices, transportation expenses and production costs, potentially worsening financial pressures on households and businesses.
The Fund called on governments to strengthen their fiscal positions, improve the effectiveness of public expenditure and establish financial buffers capable of absorbing future economic shocks. Such measures, it said, would help countries navigate an uncertain global environment while maintaining the capacity to support vulnerable populations.
The IMF and World Bank Group Annual Meetings are taking place in Bangkok from October 12 to 18, bringing together policymakers, central bank governors, representatives of financial institutions and business leaders to deliberate on pressing global economic and development issues.
