In its latest Fiscal Monitor report, launched at the ongoing
2025 IMF/World Bank annual meetings on Wednesday in Washington DC, the fund
forecasted that the country’s debt-to-GDP ratio will rise to 35.3 percent in
2027.

Nigeria’s public debt-to-GDP ratio was reported at 39.4
percent in the first quarter (Q1) of 2025, following the successful rebasing of
the country’s gross domestic product by the National Bureau of Statistics.

David Furceri, division chief of the fiscal affairs
department at the IMF, speaking during the launch of the report, advised
Nigeria to ramp up its revenue and strengthen its tax system.

He said the IMF is projecting “a neutral fiscal stance” for
Nigeria.

Fiscal neutrality refers to a principle or goal of public
finance that fiscal decisions (taxing, spending, or borrowing) of a government
can or should avoid distorting economic decisions by businesses, workers, and
consumers.

“We think that a neutral stance is also consistent in
economic policies aimed at reducing inflation. But let me tell you more about
the structural characteristics in terms of our recommendation for countries
such as Nigeria.”

“Our policies advice has been both on the revenue side as
well on the spending side because the revenue side of this scope is to improve
from revenue, to reform, to tax administration, to increase revenue.”

Furceri noted that Nigeria has made significant progress in
recent years with its tax reform efforts.

“Many of the laws that have been passed are trying to
streamline the tax code, tax expenditures have also been reduced. The burden
for business and low income also has declined in terms of taxation. These are
policies that go in the right direction,” he said.

“On the spending side, there is a scope to, on the one hand,
improve the efficiency of the spending.”

In addition, Furceri said it is important to increase social
spending, particularly to support vulnerable households and ensure inclusive
growth.