Nigeria’s economy has faced significant challenges over the past year due to several economic policies implemented by the new administration.
These policies, including the removal of gasoline subsidies and the floating of the Naira, have put immense pressure on the country’s currency.
While earlier in April, the Nigerian currency was touted as the best-performing currency globally, it plummeted to its lowest point in February, reaching as high as N1,900 per US dollar.
Presently, it is officially trading at N1,148.49 per US dollar, marking a gain of over N700 since its peak. Experts anticipate that it may soon drop below the N1,000 mark.
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Despite these improvements, the International Monetary Fund (IMF) has cautioned that Nigeria’s economy remains at risk if significant measures are not taken to revitalize it. According to the IMF, the country must focus on generating revenue to drive economic growth.
In the words of an IMF spokesperson, “For a country like Nigeria… tax revenue to GDP is only 8-9 percent when it should be a lot higher so that more resources can be spent on building universities, on building infrastructure.”
Regarding potential policy solutions, the IMF director emphasized that the decision lies with the Nigerian government and its citizens.
“First and foremost, this is for the people of Nigeria, the government of Nigeria, to choose… We have provided advice in terms of what the ideal mix of policies would be,” the director stated.
However, the IMF director acknowledged that the Nigerian government is currently adopting an approach in line with the organization’s recommendations.
“On the monetary and exchange rate area, it is also, we think, important to have a system that is broadly reflective of supply and demand conditions, and I think that is the direction in which the government has moved,” he added.