The International Monetary Fund has raised a red flag, warning that Nigeria is currently grappling with a deepening economic crisis.
The organization expressed concern about stagnant per-capita growth, widespread poverty, and severe food insecurity, which have exacerbated the persistent cost-of-living crisis in the country.
In its recently published report titled ‘Review of Nigeria’s Post Financing Assessment by the IMF Executive Board,’ the organization highlighted the challenges Nigeria is facing, emphasizing the adverse effects on the economy.
The report pointed out that inadequate revenue collection has hindered the delivery of services and the allocation of resources towards public investment.
Additionally, it noted that removing fuel subsidies, exchange rate depreciation, and the negative impact on agricultural production contributed to the observed inflation rate for October, which stood at 27 percent compared to the same period last year, with food inflation at 32 percent.
“Nigeria faces a difficult external environment and wide-ranging domestic challenges. External financing (market and official) is scarce, and global food prices have surged, reflecting the repercussions of conflict and geo-economic fragmentation,” the report stated.
Per-capita growth in Nigeria has stalled, and poverty and food insecurity are high, intensifying the cost-of-living crisis. The country’s low reserves and limited fiscal space further constrain the authorities’ options for addressing these challenges.
The report acknowledged the Nigerian authorities’ focus on restoring macroeconomic stability and creating conditions for sustained, high, and inclusive growth.
Despite the challenging economic conditions, the IMF’s Executive Board completed an evaluation of post-financing on January 12, 2024, and approved the Staff Appraisal without delay.
