The International Monetary Fund (IMF) has warned that Nigeria risks facing a serious economic crisis in 2025 unless it urgently reviews and adjusts its national budget.
In its latest Article IV report released on Wednesday, the IMF said Nigeria’s current fiscal plan, based on optimistic oil revenue projections, is no longer realistic. It cited falling global oil prices, low production levels, and difficulties in executing capital projects as key risks to the N54.99 trillion budget signed into law by President Bola Tinubu earlier this year.
The IMF warned that, without changes, Nigeria’s budget deficit could rise to 4.7% of its Gross Domestic Product (GDP) in 2025—far above the government’s target. It urged the Nigerian government to make tough choices, including adjusting spending and improving revenue collection.
“Without action, Nigeria’s fiscal deficit will exceed expectations,” the report stated. It also advised the government to prioritise recurrent spending cuts while protecting investment in key growth areas.
The 2025 budget is Nigeria’s highest in history, with heavy allocations to debt servicing and capital projects. However, the IMF fears that the country may not be able to meet its targets due to falling oil prices and over-ambitious expectations.
The Fund also called on the government to ensure that savings from the fuel subsidy removal are properly channelled back into the budget and used to boost critical sectors. It added that tax reforms alone will not bring quick revenue and stressed the need to broaden Nigeria’s income base beyond oil.
The IMF further raised concerns over Nigeria’s rising public debt, now at 53% of GDP, and recommended that the country explore alternative funding options such as public-private partnerships.
It praised recent reforms by the Central Bank of Nigeria, including tighter monetary policies that helped reduce inflation to 23.7% in April 2025 from 31% the previous year. It also acknowledged Nigeria’s effort to stabilise the naira and improve revenue collection.
In response, Nigeria’s Finance Minister, Wale Edun, said the government is monitoring global trends and adjusting accordingly. He reaffirmed Nigeria’s commitment to maintaining economic stability and continuing reforms.
Meanwhile, the World Bank also criticised the 2025 budget, describing it as overly ambitious and warning that the government might resort to borrowing from the Central Bank through the Ways and Means facility.
But Budget and Planning Minister, Senator Abubakar Bagudu, disagreed, insisting the projections are “modest” and reflect Nigeria’s potential. He stressed that budgets should be aspirational and not limited by current challenges.
With warnings from both the IMF and World Bank, pressure is mounting on the Federal Government to revise its 2025 fiscal plans and take more realistic steps to address the nation’s economic challenges.
