The International Monetary Fund (IMF) has warned that Nigerians continue to struggle with the high cost of living despite improved economic growth. The Fund has recommended targeted cash transfers and temporary income support to protect vulnerable households from rising food and energy prices.
The recommendation comes as the IMF projects Nigeria’s economy to grow by 4.2 per cent in 2026. However, the organisation cautions that stronger economic performance has yet to ease the financial pressure on many households.
According to the IMF, rising prices of essential goods continue to threaten food security and increase poverty across the country.
The Fund therefore wants the Federal Government to strengthen social protection programmes while improving public spending and revenue collection.
IMF Recommends Cash Transfers to Ease Hardship in Nigeria
The IMF said targeted financial assistance could help low-income households cope with rising living expenses.
Speaking during a press briefing at the ongoing IMF and World Bank Annual Meetings in Bangkok, Thailand, Deniz Igan, Chief of the IMF Research Department’s World Economic Studies Division, highlighted the difficulties facing Nigerian families.
She explained that economic growth had remained relatively strong, partly because Nigeria exports energy products. Nevertheless, many citizens continue to face high prices for basic necessities.
According to Igan, food and energy costs account for a significant share of household spending. Consequently, increases in these prices place considerable pressure on families with limited incomes.
The IMF believes temporary cash transfers could provide immediate relief to those most affected by the economic situation.
Such assistance, Igan explained, could reduce poverty and improve food security. However, she stressed that financial support must form part of a broader economic strategy.
The government must also improve the quality of public expenditure and strengthen revenue collection. These measures would help Nigeria manage its debt burden without placing additional pressure on ordinary citizens.
Nigeria’s Economic Growth Forecast Rises to 4.2%
The IMF has raised its forecast for Nigeria’s economic growth in 2026 to 4.2 per cent, according to the report cited by Vanguard.
The projection represents an increase from the 4.1 per cent forecast published in the Fund’s July 2026 World Economic Outlook.
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The report, titled Resilience Under Strain, Urgent Choices, examines the challenges facing the global economy amid geopolitical tensions, rising commodity prices and financial market uncertainties.
For sub-Saharan Africa, the IMF expects economic growth to remain at 4.5 per cent in 2026.
However, the organisation noted that the regional figure conceals significant differences between individual countries. Economic performance varies according to policy decisions, commodity exposure, climate-related challenges and access to external financing.
Nigeria’s outlook has benefited from improved macroeconomic stability and favourable terms of trade. Even so, higher prices for essential goods could worsen poverty and food insecurity.
The IMF also noted that countries that depend heavily on imported energy and food face greater pressure when global commodity prices rise.
For Nigerian households, this means that positive economic growth does not automatically translate into lower living expenses.
IMF Warns Global Economic Growth Could Slow
Beyond Nigeria, the IMF has warned that the global economy faces increasing pressure from geopolitical conflicts, trade tensions and higher energy costs.
The report projects global economic growth to slow from 3.5 per cent in 2025 to 3.1 per cent in 2026. Growth is then expected to recover to 3.4 per cent in 2027.
Speaking at the report’s briefing, IMF Economic Counsellor and Research Department Director Sylvana Tenreyro said the global economy had demonstrated resilience but faced growing risks.
She called on governments to strengthen their economies and prepare for future shocks rather than simply respond to existing challenges.
Tenreyro identified rising energy and commodity prices as major threats to economic activity. At the same time, investment linked to artificial intelligence has provided some support for growth.
However, the Fund warned that continued geopolitical tensions could keep food and energy prices elevated. This could trigger fresh inflationary pressure, weaken public finances and reduce household purchasing power.
The IMF projects global headline inflation to rise from 4.1 per cent in 2025 to 4.7 per cent in 2026 before falling to 4.1 per cent in 2027.
These projections highlight the uncertainty surrounding the global economic outlook and the potential consequences for countries such as Nigeria.
Artificial Intelligence Boom Raises Financial Stability Concerns
The IMF also warned that the rapid expansion of artificial intelligence investment could create new risks for financial markets.
Although investment in AI has supported economic activity and international trade, the Fund said much of the growth has been concentrated in a relatively small number of companies, industries and economies.
Consequently, a reassessment of expected AI profits and productivity gains could trigger a sharp market correction.
Such a development could reduce investment, push down share prices and tighten financial conditions. Countries and businesses connected to technology supply chains could also experience the effects.
The warning comes as policymakers attempt to balance the economic opportunities created by new technology with the risks associated with financial market volatility.
For developing economies, global market disruptions could add to existing pressures, particularly where access to affordable financing is limited.
IMF Urges Governments to Strengthen Fiscal Discipline
In response to these challenges, the IMF has called on governments to rebuild fiscal reserves, protect financial stability and encourage private-sector investment.
Tenreyro stressed that fiscal policy should help control excessive demand, particularly when inflationary risks are high.
The Fund also emphasised the importance of monetary policy focused on price stability. It maintained that central bank independence remains essential to achieving that objective.
For Nigeria, the recommendations present a policy challenge. The government must work towards sustainable public finances while protecting households already struggling with rising living costs.
The IMF’s position is that fiscal reforms and social protection should complement each other rather than operate separately.
How Should Nigeria Respond to Rising Food and Energy Prices?
The IMF also addressed the difficulty central banks face when higher oil prices push inflation upwards while economic activity weakens.
Igan explained that such a situation creates a policy trade-off because rising prices may occur alongside slowing economic activity.
This differs from demand-driven inflation, which occurs when strong consumer or business demand pushes prices higher.
According to Igan, central banks must examine the underlying causes of inflation before deciding how to respond.
She maintained that monetary authorities should keep inflation on a path towards their target, while considering the effects of their decisions on economic activity.
The IMF typically considers a period of two to three years when assessing the timeframe for inflation to return to target.
However, the appropriate response depends on each country’s circumstances, including labour-market conditions, existing inflation levels and exposure to external shocks.
For Nigeria, higher energy prices could complicate efforts to control inflation, particularly when households are already spending a large proportion of their income on food, transport and other necessities.
Balancing Economic Reforms With Household Relief
The IMF’s recommendations highlight the need for Nigeria to combine economic reforms with practical measures to reduce hardship.
Targeted cash transfers could provide short-term relief to vulnerable households. Meanwhile, better public spending and stronger revenue collection could support the government’s efforts to manage public debt.
However, the effectiveness of such interventions would depend on proper implementation, accurate identification of beneficiaries and the sustainable financing of social protection programmes.
Nigeria’s projected economic growth offers a positive outlook, but the IMF’s warning underscores the difference between national economic performance and the financial circumstances of individual citizens.
Ultimately, improving living standards will require policies that support economic stability while ensuring that vulnerable households can afford essential goods and services.
The challenge for the Federal Government is to sustain economic progress without allowing the burden of adjustment to fall disproportionately on ordinary Nigerians.
