The Nigerian economy is recovering from a historic downturn benefitting from government policy support, rising oil prices and international financial assistance.

Despite the recovery in oil prices, implicit fuel subsidies and higher security spending are dampening positive impacts as the federal government fiscal deficit widens to N6.39 tn for 2022, representing 3.46% of GDP.

Nigeria’s economic outlook faces significant risks from the covid-19 pandemic trajectory, oil price uncertainty, and security challenges, the International Monetary Fund(IMF) has said.

The global lender noted this in its report on the latest Article IV consultation with Nigeria during which its team of economists visited the country to assess and discuss economic and financial developments with the authorities

The IMF, therefore, sees the strong need for major reforms in the fiscal, exchange rate, trade, and governance areas to lift long-term, inclusive growth.

The IMF, however, commended the authorities’ proactive management of the COVID-19 pandemic and its economic impacts but highlighted the urgency of fiscal consolidation to create policy space and reduce debt sustainability risks.

Buhari’s government succumbed to pressures and postponed the removal of petrol subsidies by 18 months after the Finance Minister, Zainab Ahmed announced earlier in the year of plans to eliminate it by July 2022.

This has raised further concerns that the budget deficits would widen further when the N3trillion planned fuel subsidy for the year is accommodated.

Moreover, the consolidated government revenue-to-GDP ratio at 7.5 percent remains among the lowest in the world.