• The IMF says Nigerians may face tougher economic conditions due to rising food and transport costs
• Crude oil prices above $113 per barrel could boost Nigeria’s revenue beyond budget projections
• Experts warn that oil windfalls may not translate to economic relief without disciplined fiscal management

Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.

The International Monetary Fund (IMF) has cautioned that Nigerians may face increased economic hardship in the near future, citing rising food and transportation costs amid ongoing global uncertainties.

According to the Fund, these pressures are already affecting household incomes, even as higher crude oil prices offer prospects for improved government revenue.

Cost of living pressures deepen

Speaking at a press conference during the IMF/World Bank Spring Meetings in Washington DC, the Director of the IMF’s African Department, Abebe Selassie, said the impact of global shocks is being felt across the region, including Nigeria.

He explained that rising transportation costs and disruptions to supply chains are contributing to higher food prices and worsening living conditions.

Selassie noted that many households are already experiencing significant strain, particularly in both urban and rural areas where the cost of mobility has increased sharply.

Oil price surge raises revenue hopes

Meanwhile, Nigeria’s crude oil grades have climbed above $113 per barrel, significantly higher than the $60 benchmark set in the 2026 budget.

Data from the oil market showed that Brass River and Qua Iboe crude grades were recently sold at over $113 per barrel, reflecting a sharp rise driven by geopolitical tensions, including uncertainties surrounding US-Iran relations.

Analysts say sustained high prices could boost Nigeria’s earnings if the trend continues, although the broader economic impact remains mixed.

IMF urges policy discipline despite limited fiscal space

The IMF advised governments, including Nigeria’s, to maintain ongoing economic reforms despite constrained fiscal space.

Selassie said recent efforts to stabilise debt and reduce fiscal deficits have improved resilience, but warned against abandoning reforms in response to short-term shocks.

He emphasised the need for targeted interventions that align with long-term fiscal objectives, alongside improved spending efficiency and stronger domestic revenue mobilisation.

Debt outlook raises concerns

In its latest Fiscal Monitor report, the IMF projected that Nigeria’s debt-to-GDP ratio could rise to 33.1% by 2027, slightly lower than an earlier estimate but still above the 2026 projection.

The report also noted that Nigeria’s total public debt rose to N159.27 trillion at the end of 2025, according to the Debt Management Office.

Commenting on the findings, IMF Director of Fiscal Affairs, Rodrigo Valdés, urged governments to rebuild fiscal buffers and avoid delaying critical economic decisions.

He also warned against broad-based subsidies, describing them as costly and difficult to reverse.

Experts weigh implications of oil windfall

Economic analysts say that while rising oil prices could provide short-term relief, structural challenges remain.

David Adonri said Nigeria’s debt sustainability should be assessed based on its capacity to service debt rather than the debt-to-GDP ratio alone. He warned that potential oil windfalls could be diverted to debt servicing or recurrent spending.

Similarly, Clifford Egbomeade noted that Nigeria’s narrow tax base and reliance on informal economic activity could limit the benefits of improved revenue.

He stressed the importance of disciplined fiscal management, particularly as the country approaches the 2027 election cycle.

Rising fuel costs may offset gains

On the downside, higher crude oil prices could translate to increased domestic fuel prices.

Colman Obasi explained that refiners, including the Dangote Petroleum Refinery, may pass on higher production costs to consumers.

This, he said, could push up inflation, raise transportation costs, and deepen economic hardship, especially in the absence of fuel subsidies.

Marketers ask FG to approve import licences

Legit.ng earlier reported that the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has called on the federal government to reinstate petrol import licences, saying the move will promote competition and stabilise fuel prices in the country.

The association made this call in agreement with a similar call by the World Bank, which argued that allowing importation would prevent inflation.

According to PETROAN, the recommendation aligns with its long-standing advocacy for a liberalised downstream petroleum sector.

Source: Legit.ng