By Jeremy Fregene
The International Monetary Fund (IMF) has urged President Bola Tinubu’s administration to urgently strengthen social protection programmes and expand safety nets for millions of vulnerable Nigerians grappling with the harsh effects of ongoing economic reforms, even as it commended the government for measures that have helped stabilise the economy.
The global financial institution said Nigeria’s reform programme had improved macroeconomic stability and kept the country’s debt profile within sustainable limits, but warned that rising poverty, inflation, and food insecurity were exacting a heavy toll on citizens and required immediate government intervention.
Speaking during an interview on ARISE News Channel, IMF Resident Representative in Nigeria, Dr. Christian Ebeke, said the Fund’s latest assessment showed that Nigeria was not facing a debt crisis and remained at only moderate risk of sovereign debt distress despite growing fiscal pressures.
According to him, Nigeria’s debt-to-Gross Domestic Product (GDP) ratio remains relatively low, hovering in the mid-30 per cent range, while the country’s debt structure is supported by a healthy mix of domestic and external borrowing, much of it on concessional terms and with long repayment periods.
“Our latest assessment concludes that Nigeria’s debt is sustainable and that the country is not at high risk of debt distress,” Ebeke said, noting that the government’s reform efforts had helped improve confidence in the economy.
However, he warned that the real challenge confronting the country was the growing burden of debt servicing, which is consuming a substantial portion of government revenues.
According to the IMF official, projections show that between 2025 and 2028, about half of all federal government tax revenues will be spent on servicing interest payments on existing debts.
“When more than 50 per cent of tax revenues are devoted to debt servicing, it significantly limits the government’s ability to invest in critical sectors such as healthcare, education, security, and social welfare programmes,” he said.
The IMF stressed that while maintaining macroeconomic stability remained essential, the government must pay equal attention to cushioning the impact of reforms on ordinary Nigerians.
Ebeke noted that poverty levels were already high before the implementation of recent reforms, but soaring inflation and rising food prices had pushed even more citizens into economic hardship.
He cited World Bank estimates indicating that Nigeria’s poverty rate could reach 63 per cent by the end of 2025 if urgent measures are not taken to support struggling households.
The IMF therefore called on the Tinubu administration to institutionalise social safety net programmes, particularly cash transfer schemes, to protect low-income families from the effects of economic adjustment policies.
“Our recommendations have always been balanced,” Ebeke said. “While preserving macroeconomic stability is critical, it is equally important to have strong social protection systems that can reach the most vulnerable Nigerians.”
The Fund also advised the government to aggressively improve domestic revenue mobilisation through effective implementation of newly enacted tax laws rather than relying excessively on borrowing.
According to Ebeke, stronger tax administration and enforcement would provide the government with more resources to fund development priorities while reducing pressure on public finances.
He nevertheless cautioned that any future effort to increase taxes must be accompanied by visible improvements in public services and infrastructure in order to sustain public confidence.
“If the government wants citizens to pay more taxes, there must be a strong social contract. People must see improvements in public services and public goods,” he said.
The IMF also expressed reservations about Nigeria’s recently approved $5 billion Total Return Swap financing arrangement with First Abu Dhabi Bank of the United Arab Emirates, warning that the transaction could expose the country to hidden risks because of its complexity and lack of transparency.
Ebeke said concerns remained over the details of the agreement, including the requirement for Nigeria to pledge collateral exceeding the value of the funds being raised.
He argued that Nigeria still retained access to international capital markets and could secure funding through more transparent instruments such as Eurobond issuances without exposing itself to the uncertainties associated with complex structured financing deals.
Despite those concerns, the IMF maintained that Nigeria’s overall debt position remained manageable and endorsed the broad direction of the government’s economic reforms, while emphasising that the ultimate success of the programme would depend on whether growth and stability translate into tangible improvements in the living conditions of ordinary Nigerians.