Oil
IMF urges Nigeria to reduce oil dependence and expand tax base
The International Monetary Fund has called on Nigerian authorities to diversify revenue sources, improve infrastructure, and target energy subsidies toward vulnerable households.
Key points
- IMF advises Nigeria to mobilise non-oil revenue to fund public services.
- Targeted cash transfers recommended over broad energy subsidies.
- Economic growth projected at 4.2 percent for 2026 and 4.3 percent for 2027.
What happened
According to The Sun Nigeria, the International Monetary Fund (IMF) has advised the Nigerian government to decrease its reliance on petroleum earnings and strengthen non-oil revenue mobilization. Speaking in Bangkok, Thailand, the Director of the IMF's African Department, Zeine Zeidane, stated that expanding the tax base would help finance critical sectors such as healthcare, education, and infrastructure.
On energy subsidies, the IMF official recommended replacing broad-based price support mechanisms with direct cash transfers for low-income households. Zeidane argued that blanket subsidies disproportionately benefit wealthier citizens while constraining public finances. Furthermore, the Fund expressed support for the Central Bank of Nigeria's recent monetary policy adjustments, noting that falling inflation rates have created room for normalizing interest rates.
Why it matters
World Bank figures show that fuel exports accounted for 85.9 percent of Nigeria's merchandise exports in 2025, underscoring the country's high vulnerability to crude price fluctuations. The IMF's recommendations highlight the necessity of structural reforms to foster private investment and generate productive employment outside the petroleum sector.
During the briefing, IMF Deputy Director Montfort Mlachila noted that higher crude valuations have recently strengthened foreign exchange earnings and external buffers. The Washington-based institution forecasted that the domestic economy will expand by 4.2 percent in 2026 and 4.3 percent in 2027, following a 4.0 percent growth rate in 2025, driven largely by the services sector.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Crude benchmarks move budgets, currencies and inflation in producer and importer countries alike. For economies such as Nigeria, where fuels dominate exports, production and refining decisions move the whole economy.
85.9% of Nigeria’s merchandise exports were fuels in 2025Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
