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The Assistant Director for Global Markets at the International Monetary Fund (IMF), Jason Wu, indicated that recent government reforms have positively impacted Nigeria's macroeconomic prospects.
Wu made these statements during the ongoing IMF/World Bank 2025 Spring Meetings in Washington, D.C., on Tuesday, coinciding with the release of the agency's Global Financial Stability report for April 2025.
He noted these reforms have concurrently improved Nigeria's sovereign credit profile, but also highlighted the country's vulnerability to financial fluctuations and diminishing global risk sentiment.
“Nigeria’s sovereign spread has increased in recent weeks alongside a drop in global stock markets.
“For major commodity exporters like Nigeria, prolonged trade tensions could lead to revenue shortfalls due to a decline in global demand.
“Authorities need to remain watchful and implement appropriate policies in response,” Wu remarked.
The IMF’s Global Financial Stability Report (GFSR) pointed out Nigeria’s return to the international debt market in late 2024 with its first Eurobond issuance since 2022.
This development signifies a favorable change in investor perception towards frontier markets, driven by macroeconomic reforms and upgraded credit ratings.
He referenced the report, stating, “Sovereign eurobond spreads for frontier economies narrowed in 2024 and early 2025, owing to fiscal reforms, advances in debt restructuring, and adjustments in foreign exchange policy.”
Examples included debt restructuring efforts in Ethiopia and Ghana, along with Nigeria’s forex market reforms.
“Frontier economies were able to issue foreign currency debt at relatively low yields,” the report remarked.
Additionally, it mentioned that the total issuance in the first quarter of 2025 was about half of the entire volume for 2024.
The report also noted, “Nigeria made its return to the eurobond market in late 2024 for the first time since 2022, while Egypt re-entered in January 2025.”
It also disclosed that Angola secured foreign currency financing through a total return swap with an international bank, while Côte d’Ivoire led Africa in eurobond issuance in the first quarter.
On a regional scale, economic growth in Sub-Saharan Africa is anticipated to slightly decline to 3.8 percent in 2025 before rebounding to 4.2 percent in 2026.
However, Nigeria’s growth is projected to stay below the regional average.
“For Sub-Saharan Africa, growth is expected to decrease from 4.0 percent in 2024 to 3.8 percent in 2025, followed by a modest recovery to 4.2 percent in 2026.
“Among major economies, Nigeria’s forecast was downgraded by 0.2 percentage points for 2025 and 0.3 for 2026, attributed to falling oil prices.
“South Africa experienced a 0.5-point downgrade for 2025 and 0.3 for 2026, citing weak performance in 2024 and deteriorating sentiment,” according to the report.
Furthermore, South Sudan suffered the most significant downgrade, with a 31.5 percentage point reduction in its 2025 forecast due to delays in resuming oil production via a damaged pipeline.
On a brighter note, Nigeria’s current account balance is anticipated to stay in surplus, although diminishing from 9.1 percent of GDP in 2024 to 6.9 percent in 2025 and 5.2 percent in 2026.
This surplus may provide a degree of cushion against external economic shocks.
