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The International Monetary Fund, IMF, has warned that Nigerians may face tougher economic conditions in the near term as rising food and transportation costs continue to squeeze household incomes amid lingering global shocks.
The fund also warned of a rising debt burden for the country, as Nigeria’s crude oil grades sold above $113 per barrel at the international market, yesterday, raising fresh optimism over stronger government revenue.
The surge in oil prices comes as uncertainties continue to characterise the peace talks between the United States and Iran over the Middle East war, creating the possibility of sustained high earnings for the country.
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At the current level, Nigerian crude trades about $53 per barrel above the $60 benchmark in the 2026 Budget. Data from the oil market showed that Brass River and Qua Iboe grades sold for $113.82 and $113.72 per barrel, respectively
Prices, which started the year at about $64.85 per barrel and rose to $68.05 by the end of January, have climbed sharply amid geopolitical tensions.
Analysts say Nigeria could earn significant oil revenue from the conflict as long as hostilities persist.
Director of the African Department at the IMF, Abebe Selassie, at a press conference on the Economic Outlook for Sub-Saharan Africa, during the ongoing Spring Meetings of the World Bank/IMF in Washington DC, yesterday, said the impact of the ongoing crisis was already being felt strongly across the region, including Nigeria, with significant pressure on the cost of living.
According to him, “The immediate effect will be quite a bit of pressure, including on food security, either through the limited availability of fertilizer, expensive fertilizer, or even more immediately, as transportation costs have gone up, it’s going to raise the cost of food and so quite a bit of dislocation.
“We’re already seeing quite a lot of increase in transportation prices that people are facing already. Transportation costs are very high for people in urban areas, rural areas even more so.”
Highlighting the growing strain on households, Selassie said: “We are already seeing quite a bit of a pinch from the crisis on people. It is making life difficult for people.”On how governments, including Nigeria’s, should respond, he stressed the importance of maintaining reform momentum despite limited fiscal space.
“What is it that governments can do given the limited fiscal space? First point I need to make is we shouldn’t underestimate just how much governments have done to try and position themselves better to weather more of these shocks,” he said.
He noted that recent reforms have helped stabilise economies: “Steps have been taken to stabilise debt, to reduce fiscal deficits. So that stabilization, I think, helps now when another shock like this comes, because there is a little bit more scope to try and defray the cost.”
However, he cautioned against abandoning ongoing reforms, saying: “What we are pleading is that these interventions are consistent with the medium-term objectives that countries have, and that they’re not thrown off course by this because that would be a double whammy for countries.”
On Nigeria’s debt profile, Selassie emphasised prudent management rather than a shift in borrowing strategy.
“Whether they borrow externally or domestically has to be seen in totality, what’s really important is trying to keep the level of debt as manageable as possible relative to debt service capacity.
“Nigeria has a fantastic Debt Management Office. It depends on the macro context.”
On fiscal priorities, he advised governments to focus on protecting critical spending: “In the short term, the idea is to reprioritise spending, protect priority spending and also to improve the efficiency of spending.”
He further stressed the need to boost revenues, noting: “Domestic revenue mobilisation, tax policy, tax efficiency and the capacity to elaborate policy, but also implement policy” are critical.
Selassie also underscored the importance of public engagement, stating: “All of that will require difficult discussions, and communication is important. Engaging with stakeholders is important.”
On broader structural reforms, he said technology and trade could support resilience. “We’re already seeing efforts by governments to use AI to improve tax systems, to improve service delivery, managed well, [it] should help the region converge faster.”
He also pointed to trade integration challenges, noting that while progress has been made under the African Continental Free Trade Area, “there are key negotiations to be concluded and that limits the effectiveness of trade as a shock buffer.”
Reaffirming IMF’s readiness to support countries, he said: “the IMF is the institution that countries turn to at times like this. We are geared up to see how we can support countries as quickly as possible.”
Meanwhile, the IMF has also projected that Nigeria’s debt-to-GDP ratio will rise to 33.1 percent in 2027, despite a modest downward revision from its earlier estimate of 35.3 percent. The figure remains higher than the 32.3 percent projected for 2026.
The projection is contained in the Fund’s latest Fiscal Monitor Report released in Washington. It comes as Nigeria’s total public debt rose to N159.27 trillion at the end of the fourth quarter of 2025, according to the Debt Management Office, from N153.29 trillion in the previous quarter.
It warned of a deteriorating fiscal outlook globally, noting that rising geopolitical tensions, including the Middle East conflict, could further strain public finances through higher fuel and food prices, tighter financial conditions, and increased defence spending.
“Global debt-at-risk three years ahead now stands near 117 percent of GDP, underscoring heightened downside risks,” the IMF said.
Speaking on the report, IMF Director of Fiscal Affairs, Rodrigo Valdés, urged governments to rebuild fiscal buffers and avoid delaying tough decisions.
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“Crisis, of course, require emergency support and people focus on the crisis, but the ability to respond really depends on pre-existing fiscal space, and too often, the needed consolidation is postponed,” Valdes said
He added that countries must strengthen revenue mobilisation and avoid policies that could worsen fiscal risks.
“It would make just harder the central bank job in terms of inflation control,” Valdes said, warning against broad-based subsidies that are “fiscally costly, regressive, and hard to unwind.”
The contrasting developments highlight Nigeria’s delicate fiscal position where a potential oil windfall offers short-term relief, even as structural debt pressures continue to build.
