Nigeria's economy is projected to grow by 4.1% in 2026, according to the International Monetary Fund (IMF). This follows an estimated 4% economic expansion in 2025, driven by continuous reform efforts, better external financial buffers, and increased reserves.
However, the IMF warns that economic difficulties still affect many Nigerians. Poverty impacts 63% of the population, based on the national poverty line. About 27 million Nigerians experienced food insecurity in late 2025. These social challenges underscore a tricky balance for Africa's largest economy. Macroeconomic reforms may improve stability, but they carry significant social costs.
This projection and warning form part of the IMF Executive Board's 2026 Article IV consultation with Nigeria. The assessment highlights how global economic shifts, such as higher fuel and food prices, can affect Nigeria. While these can boost exports and government income, they also risk increasing inflation and worsening poverty. Inflation, which had been falling, rose to 15.4% in March 2026, mainly due to international price increases for fuel and food. Nigeria's stronger external financial position, with gross international reserves increasing to $46 billion in 2025 from $40 billion in 2024, provides some breathing room amidst global financial uncertainty.
IMF Executive Directors lauded Nigerian authorities for reforms that have improved stability and resilience. They cautioned that continued discipline is necessary to maintain these gains. The Board recommended a neutral fiscal stance for 2026. This aims to support economic stability and reduce inflation, while still protecting spending on essential social programs.
Further, the IMF noted Nigeria's improved external position during 2025. Gross international reserves grew from $40 billion at the end of 2024 to $46 billion. Net international reserves also saw a sharp increase, reaching $35 billion by the end of 2025, up from $23 billion in 2024. This stronger reserve position offers Nigeria greater protection against economic shocks. It is especially important during times of uncertain global financing conditions and volatile oil markets.
The IMF also raised concerns about some government spending happening outside the official budget. They called for faster reforms to improve how the budget is managed, how public money is handled, and how financial information is reported. These steps aim to increase openness and accountability. On monetary policy, the IMF advised the Central Bank of Nigeria to keep its policies strict and based on economic data. This is crucial until inflation is firmly under control and people expect prices to remain stable.
The financial system in Nigeria remains robust, partly due to recent bank recapitalisation measures. However, the IMF pointed out potential risks from rising non-performing loans, which are loans unlikely to be repaid. They also noted the strong connection between the government's finances and banks, known as the sovereign-bank nexus. Addressing these concerns will be vital for long-term economic health. The Fund anticipates that while inflation may rise in the short term due to external factors, the trend of decreasing inflation will resume in the latter half of the year.