…Says growth in Sub-Saharan Africa to slow to 3.8% in 2025 on turbulent global conditions
The International Monetary Fund (IMF) has thrown its weight behind Nigeria’s efforts to borrow more funds to meet its pressing short-term financial needs, urging the country to simultaneously ramp up revenue mobilisation and ensure prudent management of its scarce resources.
Abebe Aemro Selassie, director of the IMF’s African Department, gave the recommendation during a press briefing on the Regional Economic Outlook for Sub-Saharan Africa, held at the ongoing IMF/World Bank Spring Meetings in Washington, D.C.
“There will be a financing need,” Selassie said, adding that “what’s needed is really a judicious and agile way of dealing with the financing challenges the country faces.”
While acknowledging that long-term fiscal sustainability will require stronger domestic revenue generation, Selassie emphasised that in the interim, borrowing, if approached cautiously, can be an essential part of the solution.
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“In the long run, the financing gap can only be filled by permanent sources such as revenue mobilisation,” he said. “But in the interim, carefully looking at all of the options the country has to borrow in a contained way will be part of that solution. And I think the government has been going about this prudently and cautiously so far, we are encouraged by that.”
Selassie praised the Nigerian government for confronting long-standing macroeconomic distortions, particularly the removal of fuel subsidies and the efforts to correct foreign exchange misalignments. He described these as critical steps toward restoring macroeconomic balance.
“It’s been really good to see the government taking these issues head-on, removing fuel subsidies, which were consuming a large share of limited tax revenues without effectively helping the most vulnerable, and addressing the wide misalignment in the exchange rate,” he said.
He also noted that Nigeria is beginning to implement the third leg of the IMF-supported reform agenda: expanding social protection to cushion the impact of the reforms on the most vulnerable.
“Expanding social protection, targeting subsidies better, and ensuring that reforms benefit those who need them the most. This has all been very good to see,” Selassie said.
However, he stressed that more still needs to be done, particularly in enhancing transparency in the oil sector to ensure that revenues from subsidy removal effectively flow into the national budget.
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“There’s still a bit more work to do, especially in strengthening transparency in the oil sector so that the removal of subsidies translates into actual fiscal gains,” he noted. “We also had a recent mission to Nigeria where extensive discussions were held on these issues, as well as on broader macroeconomic reforms.”
He highlighted that boosting private sector investment and channelling more resources toward education, infrastructure, and other critical sectors will be vital to Nigeria’s economic transformation.
“Nigeria desperately needs more revenue to build more schools, more universities, and more infrastructure,” Selassie said. “There’s a comprehensive set of reforms Nigeria can pursue to foster growth and diversify the economy away from dependence on oil.”
He added that such diversification is becoming even more important in light of recent global commodity price movements.
Providing a regional outlook, Selassie said economic growth in Sub-Saharan Africa is expected to slow to 3.8 percent in 2025 and 4.2 percent in 2026, reflecting downward revisions of 0.4 and 0.2 percentage points, respectively.
“The slowdown is largely driven by turbulent global conditions, lower external demand, subdued commodity prices, and tighter financial conditions,” he explained. “These factors are having a more pronounced impact on commodity exporters and countries with strong trade linkages to the United States.”
He warned that uncertainties around the global economy remain “exceptionally high,” and any escalation in trade tensions or further tightening of financial conditions in advanced economies could dampen regional confidence and raise borrowing costs.
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Against this backdrop, Selassie pointed out that official development assistance to Sub-Saharan Africa is likely to decline, adding further strain on already-vulnerable countries.
“These developments are arriving just as many countries are grappling with higher borrowing costs and limited access to financing,” he said. “This is constraining their ability to fund essential public services and development projects.”
While inflation is beginning to ease across the region, Selassie noted that some countries are still experiencing elevated price pressures, necessitating tight monetary policy and continued fiscal discipline.
“These uncertain times demand constant fine-tuning of policy,” he said. “Governments must strike a delicate balance between driving growth and protecting the vulnerable, while also ensuring macroeconomic stability.”
He stressed the need for African countries to build fiscal and external buffers and maintain credibility and consistency in policymaking to navigate the current economic landscape.
