The International Monetary Fund (IMF) has urged the Nigerian government to make food security its top priority, as the country faces a challenging economic situation.
In a statement issued on Tuesday, the IMF said that Nigeria’s new government inherited a difficult economic legacy, characterised by low growth, low revenue collection, rising inflation, and external imbalances that had accumulated over the years.
The statement was released after the IMF Staff 2024 Article IV Mission to Nigeria concluded its visit to the country, where it met with senior government and central bank officials, as well as representatives from sub-nationals, the private sector, and civil society organisations.
The IMF said that addressing food insecurity, which affects about eight per cent of Nigerians, was the immediate policy priority. It welcomed the authorities’ approval of an effective and well-targeted social protection system, which will provide cash transfers to vulnerable households.
The IMF also praised the government’s provision of grains, seeds, and fertiliser, as well as Nigeria’s adoption of dry-season farming, which will help boost agricultural production.
The IMF said that revenue collection and oil production had improved recently, but Nigeria’s low revenue mobilisation limited the government’s ability to respond to shocks and to foster long-term development.
The IMF said that keeping fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to three per cent of GDP in 2024.
It said that the targeted social safety net programme needed to be fully implemented before the government could tackle costly implicit fuel and electricity subsidies in a way that will protect low-income households.
The IMF also welcomed the Monetary Policy Committee’s decision to further tighten monetary policy, which would help curb inflation and pressures on the naira.
The policy rate was raised by 400 basis points to 22.75 per cent, for a total tightening of 1,025 basis points since May 2022.
The IMF said that economic growth picked up in the fourth quarter, with GDP growth reaching 2.8 per cent in 2023, slightly below the pace of population growth.
It projected that GDP growth would reach 3.2 per cent in 2024, boosted by improved oil production and an expected better harvest in the second half of the year.
However, it said that high inflation, naira weakness, and policy tightening would pose challenges.
The IMF said that it would continue to support Nigeria’s efforts to achieve a more inclusive and sustainable growth path.
