On 11 December 2020 the IMF published a report following consultations with Nigeria in relation to Article IV of the IMF’s articles of association.

The COVID-19 pandemic has hit Nigeria’s economy which was already experiencing problems with reduced per capital income and high inflation. There have been pressures from low oil prices and capital outflows which together with the pandemic-related lockdown have resulted in a contraction in output and increased unemployment.

Real GDP is forecast to fall by 3.25% in 2020 with slight growth of 1.5% in 2021 and a recovery of output to pre-pandemic levels in 2022. Owing to a significant decline in revenue collections from a level that was already low, fiscal deficits will remain high the medium term. There are still downside risks owing to uncertainty around the course of the pandemic.

The IMF considers that Nigeria needs to stimulate domestic revenue mobilisation through measures such as tax policy and improvements in tax administration. Greater government revenue can create room for higher social spending and reduce fiscal risks. Revenue mobilisation requires progressive measures to increase efficiency and higher value added tax (VAT) rates and excise tax rates.

The IMF sees the ratification of the African Continental Free Trade Area (AfCFTA) as an important step. Decisive actions should be taken to tackle governance weaknesses and implement regulatory and reforms to facilitate trade including the lifting of trade restrictions. Nigeria should continue strengthening the anti-corruption framework and improve the effectiveness of the anti-money laundering (AML) and combating the financing of terrorism (CFT) framework.