The latest IMF economic prescriptions for Nigeria have generated mixed reactions among economists and financial experts, with many disagreeing on recommendations relating to taxation, monetary policy, and economic management. However, several analysts endorsed the International Monetary Fund’s concerns over the Federal Government’s proposed $5 billion loan arrangement with First Abu Dhabi Bank of the United Arab Emirates.
The IMF outlined its position in the 2026 Article IV Mission Concluding Statement on Nigeria. Among its recommendations were calls for a higher Value Added Tax (VAT) rate, continued monetary tightening by the Central Bank of Nigeria (CBN), improved transparency in government spending, increased social intervention funding, and reduced dependence on foreign portfolio investments.
The Fund also cautioned against the Federal Government’s planned $5 billion borrowing arrangement, citing concerns that the associated collateral could amount to 133.3 per cent of the loan value. Despite the concerns, the Federal Government described the IMF assessment as an endorsement of its reform programme. Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, said the report validated ongoing efforts to strengthen macroeconomic stability and restore investor confidence.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, agreed with the IMF’s concerns regarding the proposed borrowing. According to Yusuf, debt sustainability should be assessed not only through debt-to-GDP ratios but also by examining the proportion of government revenue devoted to debt servicing.
“A substantial share of public revenue is now devoted to debt-service obligations, leaving less fiscal space for infrastructure, healthcare, education, security and other growth-enhancing investments,” he said.
Head of Equity Research at Quest Merchant Bank, Mr. Tunde Abidoye, also supported the IMF’s reservations. He argued that the loan structure, reportedly designed as a total return swap, could expose Nigeria to significant financial risks if adverse market conditions emerge. Similarly, David Adonri, Executive Vice Chairman of High Cap Securities Limited, described the IMF’s warning as reasonable, though he questioned whether the government would be able to avoid additional borrowing given existing debt obligations.
While economists broadly agreed on debt sustainability concerns, opinions differed on other IMF economic prescriptions. Abidoye rejected the recommendation to increase VAT, arguing that Nigerians had already absorbed significant economic pressures from recent reforms. Ayodele Akinwunmi, Chief Economist at United Capital Plc, shared a similar position. He argued that improving tax compliance would generate more revenue than increasing tax rates.
“What Nigeria needs is not higher tax rates but broader tax compliance,” Akinwunmi said.
On monetary policy, analysts also expressed varying opinions. While Adonri supported further tightening measures to control inflation, Akinwunmi warned that additional rate hikes could slow economic growth. Abidoye noted that current inflationary pressures were largely driven by supply-side factors, limiting the effectiveness of monetary policy in addressing immediate price increases.
Analysts generally agreed with the IMF’s recommendation that Nigeria should attract more Foreign Direct Investment rather than relying heavily on Foreign Portfolio Investment.
According to experts, long-term investments are more capable of supporting productive economic activities, employment creation, and industrial growth. The IMF maintained that ongoing reforms have strengthened macroeconomic stability and projected that inflation would moderate during the second half of the year.
The debate surrounding the IMF Economic Prescriptions highlights differing views on the best path toward economic stability and growth. While experts largely support the Fund’s concerns about rising debt exposure and excessive reliance on portfolio investments, significant disagreement remains over VAT increases and monetary tightening. As policymakers continue implementing reforms, the balance between fiscal discipline, economic growth, and social welfare is expected to remain at the centre of national economic discussions.
