IMF Urges Nigeria to Deepen Fiscal, Monetary and Governance Reforms

IMF urges Nigeria to deepen economic reforms and strengthen governance

The International Monetary Fund (IMF) has urged Nigeria to deepen fiscal, monetary and governance reforms to strengthen macroeconomic stability and support more inclusive economic growth, highlighting the need for stronger revenue mobilisation, improved public financial management, transparent fiscal reporting and more effective monetary policy.

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The recommendation forms part of the IMF’s assessment of reform priorities across eight of Africa’s largest economies. For Nigeria, the Fund identified tax policy, revenue collection, government spending, monetary policy frameworks and governance as areas requiring continued attention.

The latest call comes as the Federal Government continues to implement wide-ranging economic reforms, including changes to the tax system, while the Central Bank of Nigeria (CBN) works to consolidate progress in inflation management and financial-market stability.

The IMF’s broader assessment acknowledges that reforms implemented over the past three years have strengthened Nigeria’s macroeconomic position. However, the Fund has stressed that sustaining those gains will require further policy improvements and structural reforms.

IMF Highlights Fiscal Reform Priorities

Fiscal reform remains central to the IMF’s recommendations for Nigeria.

The Fund has called for improvements in tax policy and revenue collection, stronger public financial management and greater efficiency in government spending. It has also stressed the importance of fiscal transparency and better management of fiscal risks.

Nigeria introduced a new tax reform framework in January 2026 through the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.

The reforms seek to simplify tax administration, eliminate overlapping taxes, improve compliance and broaden the government’s revenue base.

However, the tax environment remains a concern for businesses. According to the CBN’s July 2026 Business Expectations Survey, 70.8 per cent of respondents identified high and multiple taxation as their biggest constraint to business operations, ahead of insecurity and high interest rates.

The challenge for policymakers is therefore to increase domestic revenue without creating additional pressures that could discourage investment and raise operating costs for businesses.

Governance and Public Financial Management Remain Key Issues

The IMF has also called for stronger governance frameworks, particularly in fiscal transparency, public financial management and anti-corruption measures.

In its 2026 Article IV assessment, the Fund recommended strengthening the budget process, improving fiscal reporting and establishing stronger frameworks for identifying and managing fiscal risks. It also highlighted the need to improve accountability and reduce spending outside the formal budget process.

The IMF has further recommended annual reporting of general government fiscal data to improve monitoring of public finances and strengthen fiscal policy management.

For investors and businesses, greater transparency in public finances can provide clearer visibility over government borrowing, expenditure and future policy direction.

Monetary Policy Faces a Balancing Act

The IMF has also identified stronger monetary policy frameworks and transmission mechanisms as priorities for Nigeria.

The recommendation follows a period of significant monetary tightening by the CBN as the bank sought to address inflationary pressures, improve foreign-exchange market functioning and strengthen macroeconomic stability.

The CBN raised the Monetary Policy Rate from 18.75 per cent in 2023 to 27.5 per cent by the end of 2024. It also tightened liquidity conditions through increases in banks’ cash reserve requirements.

The IMF has acknowledged the progress made in reducing inflation but has urged the CBN to maintain a data-dependent monetary stance until disinflation becomes firmly established and inflation expectations become better anchored.

The Fund has also encouraged Nigeria to strengthen its transition towards an inflation-targeting framework and improve the transmission of monetary policy to the broader economy.

High Interest Rates Continue to Affect Housing and Construction

The monetary policy environment has direct implications for Nigeria’s housing and construction sectors.

High interest rates increase the cost of borrowing for developers, contractors and property investors while also making mortgages less affordable for households.

For developers relying on bank financing, higher funding costs can increase project expenses and affect the viability of new housing developments. Higher borrowing costs can also encourage developers to delay projects or increase property prices to compensate for financing expenses.

The IMF’s emphasis on stronger monetary policy frameworks therefore has significance beyond inflation and financial markets. Greater macroeconomic stability could eventually improve the predictability of financing conditions for housing and construction, although the transition will depend on sustained progress in inflation and monetary-policy credibility.

IMF Raises Concerns Over Sovereign Financing Risks

The Fund has also continued to scrutinise Nigeria’s approach to financing government expenditure and infrastructure.

In June 2026, the IMF cautioned Nigeria over a proposed $5 billion derivatives-based financing arrangement, warning that complex financing structures could expose the country to significant financial risks.

The IMF’s broader position is that Nigeria needs stronger fiscal-risk management and greater transparency around government borrowing and contingent liabilities.

This is particularly important as the country seeks to finance large infrastructure projects while managing debt-service obligations and other demands on public resources.

Infrastructure Investment Remains Critical to Growth

The IMF has identified infrastructure, electricity, agriculture, security and human capital as important areas for structural reform to support inclusive growth.

For the housing market, infrastructure investment remains particularly significant.

Reliable electricity, efficient transport networks, water infrastructure and improved urban connectivity influence the cost of housing development and the attractiveness of different locations for residential and commercial investment.

Infrastructure deficits can increase construction costs and limit the expansion of urban housing supply. Conversely, better infrastructure can open new areas for development, improve connectivity and support the growth of emerging urban centres.

The IMF’s emphasis on disciplined public investment therefore has implications for how effectively government spending can support long-term urban and housing development.

Economic Reforms Must Translate Into Broader Growth

While the IMF recognises the improvement in Nigeria’s macroeconomic position, it has also stressed that economic stability alone will not be sufficient to deliver inclusive growth.

The Fund’s June 2026 Article IV assessment noted that Nigeria’s growth was estimated at 4 per cent in 2025 and projected at 4.1 per cent in 2026. It also warned that difficult conditions for households, including poverty and food insecurity, remain significant challenges.

The IMF estimated that poverty had reached 63 per cent using Nigeria’s national poverty line and that 27 million Nigerians faced food insecurity in late 2025.

For the housing sector, these conditions highlight the importance of ensuring that economic reforms support household purchasing power and access to affordable housing finance.

Strong economic growth that does not translate into improved household incomes and access to essential services may have limited impact on Nigeria’s housing affordability challenge.

What the Reforms Mean for Nigeria’s Property Market

The IMF’s recommendations have several potential implications for the property market.

Improved fiscal management could strengthen the government’s capacity to fund infrastructure and housing-related programmes, while better revenue administration could reduce uncertainty around taxation.

A more predictable monetary environment could eventually improve access to development finance and mortgage credit if inflation continues to moderate.

Governance reforms could also improve investor confidence by providing greater transparency around public spending, infrastructure projects and government borrowing.

However, the immediate impact on the property market will depend on how reforms are implemented and whether improvements in macroeconomic indicators translate into lower financing costs, stronger household incomes and greater investment in infrastructure.

Outlook

The IMF’s latest recommendations reinforce the need for Nigeria to sustain the reform momentum of recent years while addressing weaknesses in fiscal management, monetary policy transmission and governance.

The Fund has recognised the progress made since 2023, but its assessment makes clear that further reforms are necessary to consolidate economic stability and create conditions for more inclusive growth.

For Nigeria’s housing and construction sectors, the outcome will depend not only on macroeconomic stability but also on the government’s ability to convert stronger public finances, improved infrastructure investment and better policy coordination into a more predictable operating environment.

As policymakers continue to implement reforms, investors, developers and households will be watching closely for evidence that improved economic stability can translate into lower financing pressures, stronger investment and broader access to housing.

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