Nigeria should consider taxing fuel and telecommunications services as part of broader efforts to boost government revenue, the International Monetary Fund has said, even as it acknowledged recent economic gains under ongoing reforms.
In its Article IV consultation report released on June 9, 2026, the IMF noted that Nigeria has made measurable progress in stabilising its economy, with foreign reserves rising to about $46 billion and public debt easing to 35.4 percent of gross domestic product (GDP). However, the Fund warned that the country’s persistently low revenue-to-GDP ratio remains a critical constraint on funding infrastructure and social programmes.
“The authorities have taken important steps to strengthen macroeconomic stability,” the IMF said, referring to recent fiscal and monetary adjustments. “But revenue mobilisation remains insufficient to meet Nigeria’s development needs.”
To address this gap, the IMF recommended a series of medium-term tax measures, including the introduction of value-added tax (VAT) on fuel, excise duties on telecommunications services, and potential adjustments to existing tax rates. Such measures, it argued, could significantly improve government finances if implemented carefully.
Nigeria’s revenue challenge has long been a concern for economists, with the country ranking among the lowest globally in terms of tax collection relative to the size of its economy. Despite its large population and economic potential, government earnings have struggled to keep pace with rising spending demands.
The report acknowledged recent tax reforms introduced in January aimed at modernising collection systems and improving compliance. While these steps mark progress, the IMF said they fall short of what is needed to achieve sustainable fiscal balance.
At the same time, the Fund cautioned that any new taxes must be accompanied by targeted social support to shield vulnerable households. Inflation remains elevated at around 17 percent, with food prices continuing to strain household incomes across the country.
“To mitigate the impact of reforms, especially on lower-income groups, well-targeted cash transfer programmes will be essential,” the IMF said.
The recommendations place President Tinubu’s administration in a delicate position. While increased taxation could help stabilise public finances and unlock funding for critical sectors, it also risks triggering public backlash at a time when many Nigerians are already grappling with rising living costs.
Analysts say the government will need to strike a careful balance between fiscal consolidation and social stability. “There is a narrow path here,” said one Lagos-based economist. “Revenue must increase, but reforms must be paced in a way that does not deepen hardship.”
The IMF’s latest assessment underscores both the progress Nigeria has made and the difficult choices that lie ahead. As the government weighs its next steps, the challenge will be turning economic gains into tangible improvements in living standards without fuelling further public discontent.
