IMF Backs More Borrowing to Meet Nigeria’s Short-Term Financial Needs
The International Monetary Fund (IMF) has thrown its weight behind Nigeria’s efforts to borrow more funds to meet its pressing short-term financial needs, urging the country to simultaneously ramp up revenue mobilisation and ensure prudent management of its scarce resources.
Abebe Aemro Selassie, director of the IMF’s African Department, gave the recommendation during a press briefing on the Regional Economic Outlook for Sub-Saharan Africa, held at the ongoing IMF/World Bank Spring Meetings in Washington, D.C.
“There will be a financing need,” Selassie said, adding that “what’s needed is really a judicious and agile way of dealing with the financing challenges the country faces.”
While acknowledging that long-term fiscal sustainability will require stronger domestic revenue generation, Selassie emphasised that in the interim, borrowing, if approached cautiously, can be an essential part of the solution.
“In the long run, the financing gap can only be filled by permanent sources such as revenue mobilisation,” he said. “But in the interim, carefully looking at all of the options the country has to borrow in a contained way will be part of that solution. And I think the government has been going about this prudently and cautiously so far, we are encouraged by that.”
Selassie praised the Nigerian government for confronting long-standing macroeconomic distortions, particularly the removal of fuel subsidies and the efforts to correct foreign exchange misalignments. He described these as critical steps toward restoring macroeconomic balance.
“It’s been really good to see the government taking these issues head-on, removing fuel subsidies, which were consuming a large share of limited tax revenues without effectively helping the most vulnerable, and addressing the wide misalignment in the exchange rate,” he said.
He also noted that Nigeria is beginning to implement the third leg of the IMF-supported reform agenda: expanding social protection to cushion the impact of the reforms on the most vulnerable.
“Expanding social protection, targeting subsidies better, and ensuring that reforms benefit those who need them the most. This has all been very good to see,” Selassie said.
However, he stressed that more still needs to be done, particularly in enhancing transparency in the oil sector to ensure that revenues from subsidy removal effectively flow into the national budget.
