The International Monetary Fund (IMF) has highlighted that Nigeria’s financial risk is rising due to the fall in global oil demand. This drop in demand is making it harder for Nigeria to generate revenue, posing challenges for the country’s economy and financial stability
Jason Wu, an official with the IMF, explained that Nigeria’s earlier reforms like the unification of the foreign exchange market had helped reduce risk. However, the recent dip in oil demand is causing Nigeria’s sovereign spread to rise again.
What sovereign spread means
Nigeria’s sovereign spread is the gap between what Nigeria pays investors to borrow money (using Eurobonds) and what the US government pays. A wider gap means investors see Nigeria as riskier.
IMF recognizes reforms, but urges more action
After a visit to Lagos and Abuja as part of its regular checks, the IMF said Nigeria has taken bold steps to fix the economy. These include moves to support growth and make the country stronger against external shocks.
However, Axil Schimmelpfennig, who led the IMF team, said there’s still more to do, including reducing inflation, increasing financial reserves, and supporting businesses to drive recovery.
These comments were made just before the 2025 IMF/World Bank Spring Meetings in Washington, DC.