The International Monetary Fund has urged Nigeria to be prudent in spending following the implementation of hard economic reforms that have made it so as to save more revenue.
The director of IMF’s Fiscal Affairs Department, Vitor Gaspar, said this at a Fiscal Monitor news conference at the ongoing 2025 IMF/World Bank Spring Meetings in Washington, D.C. on Wednesday.
He said that there was an urgent need for fiscal authorities and governments to build buffers. According to him, governments need to act urgently and decisively as they face harsh trade-offs and painful choices.
He said it was important for policymakers to invest their political capital in building confidence and trust, starting with keeping their houses in order.
“This is especially important in a situation that tests the resilience of individual economies, not to mention the entire system. Putting the house in order involves three policy priorities. First, fiscal policy should be part of an overall policies.
“Secondly, fiscal policy should, in most countries, aim at reducing public debt and rebuilding buffers to create space to respond to spending pressures and other economic shocks through a credible medium-term framework. Thirdly, fiscal policy should, together with other structural policies, aim at improving potential growth, thereby easing policy trade-offs in these times of high uncertainty.
“Fiscal policy must be an anchor for confidence and stability that contributes to a competitive economy, delivering growth and prosperity for all ministers of finance must build trust, tax fairly, spend wisely and take the long team,” Mr Gaspar said.
The Nigerian division chief in the department, Davide Furceri, said Nigeria had been able to make some painful choices to have space for fiscal savings, but it needs to be spent wisely.
“Nigeria managed to do a very difficult reform that was important in delivering fiscal savings,” stated Mr Furceri.
Mr Furceri said that the country needed to focus on boosting revenue through improved mobilisation efforts and scaling up spending in key areas like social protection and investment.
“That said, we understand that many countries, including Nigeria, face pressing spending needs. But spending must be done wisely, this means stronger prioritisation and greater efficiency in how resources are allocated.
“One key message not just for Nigeria, but for many countries, is the importance of strong fiscal institutions. Medium-term fiscal frameworks and solid public financial management systems are essential.
“They provide a fiscal anchor to guide necessary adjustments and help reduce uncertainty. We want fiscal policy to be a source of stability, not a source of volatility,” he said.
(NAN)
