The International Monetary Fund (IMF) has warned that Nigerians may face even tougher living conditions as inflationary pressures, rising transportation costs, and persistent global shocks continue to strain household incomes across the country.
This is as the Fund warned that despite the oil windfall, there is likely to experience increased fiscal risks for Nigeria owing to its debt-to-GDP ratio which is expected to rise to 33.1 percent by 2027, slightly lower than an earlier estimate of 35.3 percent which is still above the projected 32.3 percent for 2026.
The IMF warning comes against the backdrop of Nigeria’s near-term economic outlook, despite the country’s experiencing of a rare surge in crude oil prices, offering potential revenue relief for the government.
The Fund however, cautioned that the benefits of higher oil earnings may be offset by rising debt levels, structural weaknesses in public finances, and ongoing global uncertainties.
Director of the IMF’s African Department, Mr Abebe Selassie, who stated these at the Economic Outlook for Sub-Saharan Africa at the ongoing World Bank–IMF Spring Meetings 2026 in Washington D.C., noted that the impact of global geopolitical tensions was already being felt across African economies, including Nigeria.
Selassie further said that rising transport and food costs were driving significant economic pressure on households, stressing that the immediate effect will be quite a bit of pressure, including on food security, transportation costs which have gone up whose effect would raise the cost of food and so quite a bit of dislocation.
Sellasie also said that higher transportation expenses are already feeding into inflation, especially in urban centres where costs are rising sharply, while rural communities are seriously feeling the impact due to supply chain constraints.
While acknowledging the economic hardship, the IMF Director for African Department, noted that several governments, including Nigeria’s, have implemented reforms aimed at stabilising their economies and strengthening fiscal positions.
According to Sellasie; “These reforms—such as efforts to reduce fiscal deficits and stabilise debt—are now providing some buffer against external shocks. Steps have been taken to stabilise debt, to reduce fiscal deficits. So that stabilization… helps now when another shock like this comes”.
Selassie therefore cautioned that governments must not abandon ongoing reforms due to short-term pressures, warning that doing so could worsen long-term outcomes.
He further said; “What we are pleading is that these interventions are consistent with the medium-term objectives… and that they’re not thrown off course by this because that would be a double whammy for countries.
“The key issue is not necessarily whether countries borrow domestically or externally, but whether debt levels remain manageable relative to repayment capacity,” he said.
Selassie commended Nigeria’s debt management framework, saying that Nigeria has a fantastic Debt Management Office, emphasising that macroeconomic conditions remain decisive in shaping outcomes.
He therefore urged governments to prioritise spending efficiency, protect critical sectors, and improve domestic revenue mobilisation through better tax policies and implementation systems.
Nigeria is currently experiencing a sharp rise in crude oil prices which is driven largely by geopolitical tensions in the Middle East and uncertainties surrounding diplomatic relations involving the United States/Israel and Iran.
Nigerian crude grades such as Brass River and Qua Iboe are currently trading above $113 per barrel, significantly higher than the $60 benchmark set in the 2026 Appropriation Act. While Brass River sold for $113.82, the Qua Iboe traded at $113.72 per barrel, representing a substantial gap of over $50 per barrel above budget projections, thereby raising expectations of improved government revenue in the short term.
Stakeholders said Nigeria could benefit significantly from the oil price rally if production levels remain stable, particularly as global buyers increasingly shift demand away from unstable supply regions.
However, there are concerns that increased oil revenue may not translate into broad economic relief due to Nigeria’s rising debt obligations and structural inefficiencies in public spending.
The IMF in its latest Fiscal Monitor Report, noted that Nigeria’s total public debt rose to N159.27 trillion at the end of the fourth quarter of 2025, up from N153.29 trillion in the previous quarter.
The Fund highlighted that global debt vulnerabilities are increasing, with “global debt-at-risk three years ahead now near 117 percent of GDP,” reflecting heightened risks from geopolitical instability, inflationary pressures, and tighter financial conditions.
Also speaking, the IMF Director of Fiscal Affairs, Rodrigo Valdés, warned that governments must act decisively to rebuild fiscal buffers and avoid delaying difficult economic decisions.
Valdés therefore cautioned that postponing reforms often worsens crises and limits governments’ ability to respond effectively when shocks occur and also warned against broad subsidy programmes, describing them as “fiscally costly, regressive, and hard to unwind,” noting that such policies could complicate inflation control efforts by central banks.
