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The International Monetary Fund (IMF) has called on Nigeria and other major African economies to deepen reforms across fiscal policy, monetary and financial sectors, and governance to strengthen macroeconomic stability and support more inclusive growth.
In its latest assessment of reform priorities across the African Union’s largest economies, the IMF identified fiscal reforms as a high priority in all but one of the eight economies reviewed, with Nigeria among the countries requiring improvements in tax policy, revenue administration, public financial management and spending efficiency.
The Fund also identified strengthening monetary policy frameworks and transmission as a priority for Nigeria, Egypt and Ethiopia, while governance reforms in Nigeria and other major economies should focus on greater fiscal transparency, stronger public financial management and improved anti-corruption practices.
What the IMF is saying
The IMF said reforms across the major African economies should focus on strengthening domestic revenue mobilisation and improving the efficiency and transparency of public spending.
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- “Adopting these recommendations can help support strong, sustainable, balanced, and inclusive growth by mobilizing domestic revenue and strengthening macroeconomic institutions,” the Fund stated.
For Nigeria, the recommendations come as the Federal Government continues to implement a broad tax reform programme designed to simplify the tax system, improve compliance and expand the country’s revenue base.
- The reforms, which took effect in January 2026, established a new framework through the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.
The measures are intended to eliminate duplicate taxes, harmonise tax administration, improve compliance and reduce the burden on smaller businesses.
- However, businesses continue to report challenges with multiple taxes and government levies despite the reforms.
The Central Bank of Nigeria’s July 2026 Business Expectations Survey showed that 70.8% of respondents identified high and multiple taxation as the biggest constraint to business operations, ahead of insecurity and high interest rates.
The IMF’s recommendation on strengthening Nigeria’s monetary policy framework comes after one of the most aggressive tightening cycles undertaken by the CBN in recent years.
Following the appointment of Olayemi Cardoso as CBN governor in 2023, the apex bank pursued tighter monetary and liquidity conditions alongside foreign exchange reforms aimed at addressing inflation, restoring market confidence and improving macroeconomic stability.
Backstory
The Monetary Policy Rate stood at 18.75% in 2023 before the CBN began a series of increases in 2024. The benchmark rate was raised to 22.75% in February 2024 and subsequently reached 27.5% by the end of the year.
The CBN also tightened liquidity through changes to banks’ Cash Reserve Ratio, raising it from 32.5% to 45% in early 2024 and subsequently to 50% as part of efforts to absorb excess liquidity.
The tightening cycle has since given way to a gradual easing phase as inflationary pressures moderated and economic conditions improved.
Presidential aide Tope Fasua has, however, called for a rethink of the tight monetary policy stance, arguing that prolonged high interest rates could constrain economic growth without necessarily producing the desired reduction in inflation.
What you should know
In June, IMF cautioned Nigeria over its plan to raise up to $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank.
The IMF said derivative-based sovereign financing arrangements could expose countries to significant risks because their terms are often difficult to assess.
In December, the Federal Government secured about $1.2 billion in financing from the United Arab Emirates to advance construction of a key segment of the Lagos–Calabar Coastal Highway.
