- Raises 2026 growth forecast to 4.2%, retains 4.3% for 2027
•Backs CBN’s data-driven inflation fight, urges stronger banking sector safeguards - Oyedele cautions against higher taxes on vulnerable households, calls for policy alignment to unlock AfCFTA
Nume Ekeghe in Bangkok, Thailand
The International Monetary Fund (IMF) yesterday warned that poverty remains high in Nigeria despite resilient economic growth, urging the federal government to provide targeted, temporary support to vulnerable households as rising food and energy costs continue to undermine living standards.
The Fund, however, raised Nigeria’s economic growth forecast for 2026 by 0.1 percentage point to 4.2 per cent, while retaining its projection of 4.3 per cent for 2027, reflecting expectations of continued economic expansion despite persistent domestic and external challenges.
The IMF’s assessment came as the Group of 24 (G-24), chaired by Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, called on the IMF and the World Bank to make development financing more affordable, warning that developing countries pay an estimated $500 billion more in borrowing costs than developed economies.
At the ongoing IMF/World Bank Annual Meetings in Bangkok, Thailand, Oyedele urged African countries to improve policy coordination, remove barriers to intra-African trade and mobilise private capital to accelerate economic transformation through the African Continental Free Trade Area (AfCFTA).
The Fund also acknowledged improvements in Nigeria’s inflation outlook, supporting a data-driven approach by the Central Bank of Nigeria (CBN), while emphasising the need for stronger capital and liquidity buffers, effective banking supervision and timely recognition of bad loans.
IMF: Poverty Remains High Despite Growth
The IMF’s projections were presented in its 2026 World Economic Outlook, titled Resilience Under Strain, Urgent Choices, released during the Annual Meetings.
Speaking on fiscal policy responses to rising living costs in Africa, the Fund’s Research Department Division Chief, Deniz Igan, said policymakers needed to balance immediate household needs with medium-term fiscal stability.
She explained that the disproportionate rise in food and energy prices had intensified the cost-of-living crisis, making it necessary for governments to protect vulnerable citizens without undermining the sustainability of public finances.
“What we are advocating for is for policymakers to balance the near-term needs of the population, and that involves food security.
“That involves energy security. Given that the prices of food and energy are increasing disproportionately, while also keeping in mind medium-term stability, how to do that is, of course, a great question,” she said.
Igan noted that the IMF had examined fiscal policy responses capable of addressing situations in which essential goods become more expensive faster than the broader consumption basket.
Using Nigeria as an example, she said the economy had demonstrated resilience, partly reflecting its position as an energy exporter, but the benefits of growth had yet to sufficiently address widespread poverty and household hardship.
“While growth held up in Nigeria, given that it is an energy exporter, poverty rates are still very high, and we are very mindful that the population is suffering, especially when it comes to food security, with risks also arising from El Niño,” she said.
The IMF therefore recommended targeted and temporary income support, including cash transfers, to cushion the effects of higher living costs on the most vulnerable households.
According to Igan, such interventions could alleviate poverty and improve food security, provided they were consistent with a credible medium-term fiscal framework.
She said governments also needed to improve the quality of public expenditure and strengthen revenue collection to ensure that social protection measures remained sustainable.
IMF Backs CBN’s Inflation Fight, Urges Banking Sector Vigilance
Separately, the IMF acknowledged improvements in Nigeria’s inflation outlook, suggesting that a less restrictive monetary policy stance could eventually become appropriate, provided incoming economic data continued to support such a decision.
The Fund’s Assistant Director in the Monetary and Capital Markets Department, Jason Wu, made the assessment at the launch of the Global Financial Stability Report, titled Resilience, Risk, and Transformation, during the Annual Meetings.
Wu stressed that the progress recorded on inflation made monetary policy credibility, data dependence and transparent communication particularly important as the CBN assessed the appropriate direction of policy.
“We have seen improvements on the inflation front, which suggests that a perhaps not as tight monetary policy stance would be appropriate,” he said.
He cautioned, however, that central banks needed to remain responsive to changing economic conditions and clearly explain the rationale behind their decisions, particularly as renewed inflationary pressures and uncertainty continued to shape the global outlook.
“I think what’s important is credibility. In other words, the central bank has to be data-driven and has to be able to explain the decisions clearly. And so far, based on what we have seen, it seems like the news is on the good front,” he added.
According to him, continued reliance on economic data and clear policy communication would be essential to containing further inflationary shocks.
Beyond monetary policy, the IMF urged regulators to strengthen banking sector oversight, noting that recapitalisation alone would not guarantee financial stability without effective supervision and appropriate prudential safeguards.
Wu said emerging economies needed to ensure that stronger capital positions were accompanied by adequate liquidity requirements and timely recognition of credit losses and non-performing loans.
“On strengthening the banking sector, I think often what we see in emerging economies is, after recapitalisation, starting to impose appropriate regulations to prevent risks from building up in the future,” he said.
He also identified the relationship between sovereign and banking sector risks as a critical concern for African economies, urging regulators to understand financial institutions’ exposure to government debt and related vulnerabilities.
The IMF official said these measures would help strengthen banks’ resilience and reduce the likelihood that emerging risks would undermine financial stability.
His comments come amid efforts by Nigeria’s banking industry to strengthen capital positions following the CBN’s recapitalisation exercise.
Meanwhile, the IMF’s Deputy Director in the Monetary and Capital Markets Department, Athanasios Vamvakidis, said emerging markets had remained resilient despite elevated global bond yields, supported by stronger domestic fundamentals, sound policies and investor appetite for risk.
However, he warned that the combination of high yields and historically narrow credit spreads could leave developing economies exposed if global financial conditions deteriorated.
He said developments in advanced economies and renewed energy price shocks could widen spreads, raising borrowing costs even for countries with relatively strong economic fundamentals.
Vamvakidis urged emerging economies to strengthen financial buffers in anticipation of adverse scenarios, adding that transparency was essential to sustaining investor confidence and access to international capital markets.
He said clear information about countries’ financial obligations could reassure investors and preserve financing opportunities, particularly for African economies that depend on international borrowing.
G-24 Seeks Cheaper Financing for Developing Countries
The G-24 called on the IMF and the World Bank to expand access to affordable concessional financing and accelerate sovereign debt restructuring, warning that high borrowing costs are constraining developing countries’ ability to finance infrastructure, social services and job creation.
Oyedele, who chairs the group, made the appeal at its press briefing during the Annual Meetings, arguing that developing economies faced a disproportionate financing burden estimated at about $500 billion compared with developed countries.
He said borrowing remained necessary to finance development and stimulate investment, but the cost of debt was increasingly limiting governments’ capacity to deliver inclusive growth.
“What we have seen by members of the G-24 and across, particularly the developing countries, such as those in Africa, is the increasing burden of not just high debts or high costs of debts. To the extent that we have some estimates indicating that these developing countries are paying in the region of about $500 billion more than they should be paying compared to developed countries,” he said.
The group urged the Bretton Woods institutions to make short-term concessional borrowing more affordable, particularly for vulnerable countries facing mounting fiscal pressures, while developing frameworks that would attract more private investment over the longer term.
Oyedele said greater access to affordable financing would help governments direct limited public resources towards areas where they were most needed, including healthcare, education and social protection.
The G-24’s intervention comes as developing economies contend with debt vulnerabilities and competing expenditure demands, with debt-servicing obligations threatening to crowd out investments that could support economic growth and improve living standards.
The group also called for more predictable, timely, orderly and coordinated sovereign debt treatment, alongside greater transparency and improvements in credit-rating assessments.
The Director of the G-24 Secretariat, Iyabo Masha, said progress had been made in strengthening the international debt-resolution architecture, including updates to debt sustainability assessments and restructuring procedures.
She cited improvements to the IMF’s debt sustainability framework and developments under the Global Sovereign Debt Roundtable and the Common Framework, which are intended to facilitate more effective responses when countries face unsustainable debt burdens.
However, Masha said further reforms were necessary, particularly to ensure that private creditors participated more effectively in debt-resolution initiatives. Countries with substantial exposure to privately held bonds, she noted, might not benefit fully from existing arrangements.
She also called on advanced economies to support improvements in credit-rating methodologies, arguing that developing countries should not be unfairly penalised when their debt sustainability and financing risks are assessed.
Masha cited the experience of countries such as Sri Lanka as evidence of the weaknesses exposed by previous debt crises, adding that the Borrowers’ Platform, spearheaded by the United Nations Conference on Trade and Development (UNCTAD), could strengthen cooperation among debtor countries and improve knowledge-sharing on sustainable borrowing.
Oyedele Warns Against Taxing Vulnerable Households
Beyond the cost of borrowing, Oyedele cautioned governments against responding to fiscal pressures by imposing additional taxes on vulnerable households and productive sectors of their economies.
He argued that governments needed to improve domestic revenue mobilisation and identify inefficient expenditure while ensuring that fiscal measures did not deepen hardship or weaken economic activity.
According to him, taxation and borrowing both have economic and social consequences and should be assessed according to their implications for household welfare, investment and long-term development.
He noted that higher taxes could deprive low-income households of resources needed for food, healthcare and education, while excessive taxation of businesses could undermine productive activity and employment.
“The way I like to put it is: if you collect taxes, you raise the money now, and that itself has a lot of trade-offs. What taxes are you collecting? Are you collecting taxes from the most vulnerable, and this will deprive them of money to provide food, health, education? They have to be mindful of tax, and debts is future taxes,” he said.
He added that the choice was not simply between taxation and borrowing, but about striking a balance that supported sustainable public finances without undermining citizens’ welfare.
“So it’s not one or the other. It’s to strike a balance, bearing in mind ultimately that the essence of tax and of debts is to cater for the people. If you put people always at the centre of your policies, you will not be perfect, but you are likely to strike a balance that works and is sustainable,” he said.
His remarks highlighted the dilemma facing developing economies as governments seek to raise revenue, contain debt and meet rising demands for public services.
Oyedele also stressed that economic growth needed to create employment and improve living standards rather than be judged solely by headline macroeconomic indicators.
He warned that the adoption of artificial intelligence could complicate employment prospects if governments failed to make deliberate policy choices on its deployment and regulation.
“It’s not only just the World Bank and the IMF. This is a collective responsibility for all of us to ensure that growth is not just for the sake of growth. It has to be job-rich. It has to be inclusive, and at the end of the day, must be able to translate to better living standards for our people,” he said.
Masha, however, maintained that macroeconomic stability remained essential to achieving these objectives, arguing that governments needed a stable economic environment to implement structural reforms, employment policies and infrastructure programmes.
Oyedele agreed, describing stability as the foundation for sustainable growth and prosperity.
“The stability itself is the foundation upon which you can build the growth and the prosperity that you want for your people,” he said.
Oyedele: Africa Needs Policy Alignment to Unlock AfCFTA
On regional economic integration, Oyedele called for stronger policy coordination among African countries, arguing that the AfCFTA could transform the continent’s economic prospects if governments removed trade barriers and established consistent rules and standards.
Speaking at the Africa’s Golden Future panel during the Annual Meetings, he said the agreement offered an opportunity to turn Africa’s fragmented national markets into a larger, more competitive continental market capable of supporting production, investment and trade.
“So we have a lot of small countries, and what AfCFTA is trying to do is to turn 54 countries into one market, so that way it’s easy for us to scale. But that will not happen until we remove the barriers, and many of them are actually non-tariff,” he said.
He explained that effective implementation would require clear standards, predictable regulations and supporting infrastructure, noting that non-tariff barriers remained a major impediment to intra-African commerce.
Oyedele cited Nigeria’s National Single Window initiative as an effort to streamline border processes and improve trade facilitation, adding that technology was being deployed to make the process more efficient.
He also disclosed that Nigeria was developing an economic policy framework incorporating its international commitments, including regional treaties.
According to him, economic integration would remain difficult if countries failed to align their trade, fiscal and monetary policies, even within their own borders.
“If you have trade policies, fiscal policies, monetary policies, and they’re not speaking together even within the same country, you can imagine the nightmare dealing with 54 or 53 other countries,” he said.
The minister also emphasised that policy consistency, institutional strength and public trust were critical to attracting private capital, which Africa needs to close its development financing gap.
“Capital follows trust before it follows returns. They need to be able to plan and predict what you are going to do,” he said.
Reflecting on Nigeria’s economic reforms, Oyedele said governments needed to communicate the reasons for policy changes clearly, demonstrate the consequences of failing to implement them and ensure that reforms were properly sequenced.
He explained that price corrections should be followed by efforts to stabilise the economy before policies to expand growth were pursued.
Institutionalising reforms through legislation and strong institutions, he added, would help ensure that they survived changes in political leadership.
“But most importantly, think about how do you make it sustainable, and that’s by putting it into institutions and putting it into law. So, most of the reforms we did in Nigeria are either enacted into law or embedded into institutions, because you need to be able to do that for sustainability,” he said.
He also cautioned that reform implementation needed to account for the circumstances of vulnerable citizens, particularly in African countries where poverty and limited access to education remained widespread.
Oyedele said governments had to ensure that people could withstand the immediate effects of economic adjustment while waiting for the benefits of reform to materialise.
He cited cash transfers to more than 10 million households in Nigeria and education funding supporting more than 1.5 million students as examples of social protection measures intended to cushion the impact of reforms, according to his remarks.
The minister maintained that Nigeria’s experience demonstrated the possibility of implementing difficult economic reforms, provided governments remained committed to policy consistency, institutional development and measures to protect vulnerable populations.
His position reinforced the broader message from the meetings: economic stability, affordable development financing and regional integration must work together to generate investment, create jobs and deliver tangible improvements in citizens’ living standards.