On January 16, 2026, the World Bank and the International Monetary Fund (IMF) called for urgent measures to reduce inflation, urging that the current economic progress should directly improve the lives of households.
Both institutions acknowledged that ongoing macroeconomic improvements are being realized due to reform initiatives, yet they stressed that "the inflation rate remains significantly elevated."
Speaking in Lagos during a panel discussion at the Nigerian Economic Summit Group (NESG) 2026 Macroeconomic Outlook, Dr. Samer Matta, the World Bank Senior Economist for Nigeria, and Dr. Christian Ebeke, the IMF Country Representative for Nigeria, shared these insights.
The NESG's report, titled "Consolidating economic stabilization gains: a pathway to sustainable growth in Nigeria," underlined a mixed outlook for the country’s economy.
On Tuesday, the World Bank raised its growth projection for Nigeria’s economy in 2026 to 4.4% from a previous estimate of 3.7% made in June 2025. Moreover, the forecasts for economic growth in 2027 were also elevated to 4.4% compared to an earlier 3.8%.
During the NESG event, Ebeke cautioned that there is a danger of the country becoming complacent, mistakenly believing that all efforts to stabilize the economy have been completed. He referred to "hydrogenic volatility," which he described as the risks arising from policy errors that might be self- inflicted.
Ebeke urged both the Federal Government and subnational entities to enhance public spending quality, emphasizing that for macroeconomic stability to positively influence household welfare, spending must be effectively managed.
"This is the only viable path for Nigeria considering the reforms already undertaken. The country has opted for a flexible exchange rate and liberalized its financial sector to promote participation in fixed income markets. Moreover, prices are allowed to move freely, indicating economic signals. Reintroducing distortions or heavy government interventions in pricing is not sustainable anymore."
"Going forward, the key is to maintain both fiscal and monetary policies on the right path; however, crucial tasks still lie ahead, particularly since inflation remains high and not yet under control."
According to Ebeke, Nigeria currently faces two significant risks, one being the inclination to think the crisis is resolved. He expressed concern that this belief appears more pronounced at the state level, where enhanced fiscal capacity might lead to dangerous cross-cyclical policy-making prior to upcoming elections, potentially undermining gains made by the Central Bank of Nigeria's (CBN) leadership and related ministers.
Matta added his worries regarding a forecast indicating Nigeria's inflation rate might drop to single digits by 2029. "Effective policymaking aims to enhance the quality of life for citizens, with a direct link to inflation metrics. Presently, with inflation levels above double digits, reversing this trend will prove challenging."
While celebrating the reduction in inflation, he noted it remains a significant barrier to improving household welfare. "We should not prematurely declare victory in this battle. It's imperative to understand that monetary policy tools have reached their limit, and we must consider government spending for social safety nets."
He indicated that starting in 2024, many subnational governments are likely to have much greater revenues than the federal administration, with a majority enjoying fiscal surplus.
"The essential question is whether this spending supports positive developments beyond capital projects and infrastructure, especially in critical public service sectors like education and health."
Matta further stressed that social protection shouldn't merely encompass direct benefits. "While direct benefits matter, they must be scaled and sustained to create broader impacts."
The NESG anticipates a GDP growth of 5.5% in 2026, with projected inflation hitting 16%.
Omisakin, the NESG Chief Economist, explained the growth forecast is driven by the crucial need for consolidation. The report sets ambitious targets, including an inflation rate of 16% alongside a projected exchange rate of N1,480 per US dollar, with external reserves expected to climb to $52 billion.
He pointed out that while Nigeria is in a stabilization phase with notable achievements in GDP growth, inflation control, and management of foreign reserves, considerable challenges still lurk.
Highlighting four pivotal pillars essential for maintaining economic gains—macroeconomic stability, structural transformation, institutional strength, and social support—Omisakin called for sustained adherence to single-digit inflation, reserves above $50 billion, and favorable real interest rates.
He urged for a focus on structural shifts in agriculture, manufacturing, power, and diversification of exports, citing current growth rates of 1.5% for manufacturing and 2% for agriculture as insufficient indicators of robust economic progress.
Omisakin also pointed out the necessity for better implementation of new tax legislation, fiscal discipline, and transparency in public expenditures to achieve institutional strengthening.
He concluded that social protection strategies must transition from merely safeguarding citizens from economic shocks to integrating them into productive activities.
Niyi Yusuf, the NESG Chairman noted Nigeria has moved from a state of “severe macroeconomic instability to a more predictable economic landscape.” He did, however, warn against policy inconsistency and reform fatigue. He reflected on the years of 2024 and 2025 being characterized by significant reforms in foreign exchange, energy pricing, and monetary policy—actions that, while painful, were necessary steps toward achieving macroeconomic stability and curtailing systemic fluctuations.
He cited that while GDP growth improved to 3.8% over the first nine months of 2025, up from 3.2% year-on-year, the growth remains largely reliant on the services sector, which encompasses nearly 60% of GDP. He expressed that balancing stabilisation with longer-term prosperity remains crucial, as the current growth does not uniformly benefit the entire economy, leading to persistent low welfare outcomes among households.
In other developments, Finance Minister Mr. Wale Edun clarified that Nigeria's public debt which totals N152 trillion primarily results from foreign exchange adjustments rather than new borrowing. He provided insights stating that this clarification was made to ease public apprehensions regarding the debt increase, emphasizing recent fiscal and exchange rate changes.
The Finance Ministry noted that approximately N30 trillion of the current public debt has come from previously unacknowledged Ways and Means advances that have since been included in government accounts, reflecting enhanced transparency standards.
Furthermore, nearly N49 trillion of the debt increase arose from foreign debt revaluation due to the recent adjustments in exchange rates. In response to critiques regarding slow growth in the agricultural and manufacturing sectors, Edun conceded this reality but affirmed continual growth across 27 other sectors.
He underscored that after eliminating distortions and initiating stabilizing measures, the focus is now shifting towards bolstering growth through escalated investments in essential sectors, including advancing digital infrastructure, which includes the installation of over 90,000 kilometers of fiber optic cables—a collaborative effort with the World Bank and the Ministry of Communications.
On a related note, the Deputy Governor of the Central Bank of Nigeria, Dr. Mohammed Sani Abdullahi, remarked that the bank has transformed from its previous “flamboyant” operational style to one that is now more conservative and focused solely on its primary responsibilities.
He elaborated that prior to 2023, the CBN’s interference in numerous economic facets led to severe issues, including N30 trillion in Ways and Means funding which exacerbated inflationary challenges.
Abdullahi emphasized the shift towards a more restrained approach as a strategy to ensure that the central bank effectively fulfills its mandates relating to price stability, exchange rate oversight, and financial counsel for the government.
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