The executive board of the Washington-based institution said this in a statement issued on Monday following the conclusion of its 2021 article IV consultation with Nigeria. At the onset of the COVID-19 pandemic, Nigeria received a $3.4 billion facility from the IMF in April 2020.

The IMF board commended the proactive approach of Nigeria’s authorities to contain the COVID-19 pandemic and its economic impacts. It, however, said the country’s outlook remains subject to significant risks, including from the pandemic trajectory, oil price uncertainty, and security challenges.

“Directors noted that Nigeria’s capacity to repay the Fund is adequate. They encouraged addressing data gaps to allow timely and clear assessments of reserve adequacy,” the statement reads.

The directors emphasised the need for major reforms in the fiscal, exchange rate, trade, and governance areas to lift long-term, inclusive growth. “Directors highlighted the urgency of fiscal consolidation to create policy space and reduce debt sustainability risks.

In this regard, they called for significant domestic revenue mobilisation, including by further increasing the value-added tax rate, improving tax compliance, and rationalising tax incentives,” the statement reads. “Directors also urged the removal of untargeted fuel subsidies with compensatory measures for the poor and transparent use of saved resources.