FG Reforms Enhance Nigeria’s Macroeconomic Outlook, IMF Reports

Washington: Recent government reforms have notably improved Nigeria's macroeconomic outlook, according to Mr. Jason Wu, Assistant Director for Global Markets at the International Monetary Fund (IMF). Wu made this statement during the ongoing IMF/World Bank 2025 Spring Meetings in Washington, D.C., while releasing the agency's Global Financial Stability Report for April 2205.

According to News Agency of Nigeria, Wu highlighted that the reforms have positively affected Nigeria's macroeconomic landscape, although the country's sovereign credit profile has been simultaneously lowered. He warned that Nigeria remains vulnerable to financial volatility and a weakening global risk appetite. Wu noted the widening of Nigeria's sovereign spread in recent weeks amidst declining global stock markets, emphasizing the need for vigilance and appropriate policy responses from Nigerian authorities.

The IMF's Global Financial Stability Report underscored Nigeria's return to the international debt market in late 2024 with its first Eurobond issuance since 2022. This move marked a favorable shift in investor sentiment towards frontier markets, driven by macroeconomic reforms and enhanced credit ratings. The report indicated that sovereign Eurobond spreads for frontier economies narrowed in 2024 and early 2025, facilitated by fiscal reforms, progress in debt restructuring, and foreign exchange policy adjustments.

The report also detailed the economic activities of various frontier economies, noting that Nigeria's return to the Eurobond market and Egypt's re-entry in January 2025 signified a buoyant market environment. Angola's foreign currency financing through a total return swap and C´te d'Ivoire's significant Eurobond issuance were also highlighted as key developments in the region.

Regionally, Sub-Saharan Africa is projected to experience a slight decline in economic growth to 3.8 percent in 2025, with a subsequent rebound to 4.2 percent in 2026. However, Nigeria's growth is expected to remain below the regional average, with a forecast downgrade of 0.2 percentage points for 2025 and 0.3 percentage points for 2026 due to falling oil prices. South Africa and South Sudan also faced growth downgrades, with the latter experiencing the sharpest decline due to delays in resuming oil production.

On a positive note, Nigeria's current account balance is anticipated to remain in surplus, albeit decreasing from 9.1 percent of GDP in 2024 to 6.9 percent in 2025, and further to 5.2 percent in 2026. This surplus is expected to provide some protection against external economic shocks.