The International Monetary Fund (IMF) has advised the Nigerian government to review its 2025 budget to align with lower-than-expected global oil prices, according to its Article IV Consultation Report released on Wednesday in Washington, DC.
The recommendation comes as Nigeria's N54.99 trillion 2025 budget was benchmarked at $75 per barrel of crude oil, while current Brent and West Texas Intermediate futures hover around $68.68 and $67.04 respectively, creating a significant gap between projection and reality.
"2025 budget needs to be recalibrated to lower oil prices," the IMF emphasized in its report, highlighting the need for fiscal adjustments to reflect market realities. The international financial institution noted that crude oil prices had only briefly reached the $75 benchmark during mid-June 2025, at the height of tensions between Israel and Iran.
Despite this cautionary advice, the IMF raised Nigeria's growth rate projection from 3.2 percent to 3.4 percent, citing higher oil output and declining inflation. According to Minister of State Petroleum Resources (Oil), Heineken Lokpobiri, Nigeria's oil production currently stands at 1.745 million barrels per day, while inflation has decreased to 22.97 percent in May.
Budget Realities and Economic Outlook
The IMF's recommendation underscores the challenges Nigeria faces in balancing ambitious fiscal plans with volatile global oil markets. As Africa's largest oil producer, Nigeria's federal budget remains heavily dependent on oil revenues, making accurate price benchmarking crucial for fiscal stability.
Economic analysts suggest that an overestimated oil price benchmark could lead to significant budget deficits if actual revenues fall short of projections, potentially forcing the government to increase borrowing or cut planned expenditures.
The IMF's upward revision of Nigeria's growth forecast, however, indicates confidence in the country's broader economic trajectory, particularly as the Central Bank of Nigeria continues implementing reforms to stabilize the economy and manage inflation.
As the government considers the IMF's advice, stakeholders will be watching closely to see how fiscal policies might be adjusted to accommodate the realities of global oil markets while maintaining momentum on economic growth and development initiatives.
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