The International Monetary Fund (IMF) has advised Nigeria to revise its proposed N54.99 trillion budget for 2025, citing declining oil revenues and rising fiscal pressures. It also urged the country to maintain tight monetary policy and continue with high interest rates until inflation shows more significant reduction.

While these recommendations may align with traditional economic prescriptions, their real-life implications for Nigerians are dire. They threaten to worsen already widespread poverty, choke productivity, and hinder meaningful economic recovery.

Inflation Eases, But Nigerians Still Struggle

Nigeria’s inflation rate has slowed, falling from an average of 31% in 2024 to 22.97% by May 2025. However, this modest improvement has not translated to relief for ordinary Nigerians. Food prices remain prohibitively high, wages are stagnant, and the cost of living is suffocating households.

Over 33% of the population remains unemployed, and more than 130 million Nigerians are trapped in multidimensional poverty. Behind these statistics are countless families missing meals, children pulled from school, and struggling business owners unable to stay afloat.

The IMF’s focus on fiscal tightening may appeal to global creditors, but for Nigerians, it risks compounding a crisis of survival.

Credit Starvation Is Crippling the Economy

A central challenge facing the Nigerian economy today isn’t just the lack of funds—it’s the lack of access to those funds. Commercial banks often avoid lending to micro, small, and medium-scale enterprises (MSMEs), which form the backbone of the economy. When they do lend, interest rates hover around 27% to 30%, and collateral requirements are impossibly steep.

This credit drought locks out the very people who could stimulate economic growth. Entrepreneurs, farmers, artisans, and cooperative societies are suffocating from the inability to access affordable capital. In essence, the economic engine is being starved of the oxygen it needs to run.

Former U.S. Federal Reserve Chair Ben Bernanke once said that during financial crises, the problem is not always overspending, but when “creditworthy people can’t get credit.” Nigeria is now confronting that exact scenario.

A Smarter Alternative: Credit Empowerment, Not Austerity

There is a viable path forward. If the federal government reallocated just 3% of the national budget—equivalent to N1.65 trillion—it could establish a National Loan Guarantee Fund.

This fund would absorb the first N10 million in loan risk per borrower, giving commercial banks the confidence to lend to high-potential small businesses, cooperatives, and producers. With an average loan size of N1 million, the fund could enable financing for approximately 1.65 million Nigerian entrepreneurs.

Even if only two-thirds of those loans succeed, that’s more than one million new jobs. These businesses would generate income, pay taxes, hire workers, and strengthen local supply chains. The initial N1.65 trillion investment would not disappear—it would circulate, stimulate the economy, and yield long-term benefits.

The Fiscal Deficit Warning Misses the Bigger Picture

The IMF also warned that Nigeria’s fiscal deficit may rise from 4.1% to 4.7% of GDP, a difference of around N660 billion. But in a country where annual losses due to corruption, inefficiency, and revenue leakages far exceed that amount, such a warning seems narrow in scope.

Rather than slashing budgets that support productive sectors, the focus should be on plugging wasteful expenditure and enabling sectors like agriculture, construction, and telecoms to thrive.

If the government invests in expanding the productive base of the economy, the resulting growth can far outpace the slight increase in the fiscal deficit.

Austerity Could Backfire

History shows that excessive austerity in vulnerable economies tends to deepen poverty, reduce social cohesion, and eventually destabilize the political and economic environment. When people lose access to food, healthcare, education, and jobs, no fiscal discipline will save a failing system.

The paradox is that by obsessing over fiscal balance, policymakers may trigger the very instability they seek to prevent.

Nigeria Needs a Tailored Solution, Not Imported Templates

Nigeria’s economy cannot flourish on one-size-fits-all solutions crafted in foreign boardrooms. While fiscal responsibility is important, it should not come at the cost of national development or human survival.

Nigeria’s unique challenges require localized, people-centered solutions—solutions that reflect the country’s demographics, informal economy, and entrepreneurial spirit.

This is not the time for applause from international financial institutions. It is the time to create opportunity for the millions ready to build, feed, employ, and innovate.

Open the Gates to Recovery

The country must prioritize inclusion over orthodoxy. That means:

• Creating a national credit guarantee framework that de-risks small business lending

• Rebuilding enforcement around fiscal leakages and redirecting funds into productive sectors

• Easing access to finance through digital platforms and microfinance institutions

• Supporting informal and rural economies that employ the majority of Nigerians

• Emphasizing growth in sectors with immediate multiplier effects—such as agriculture, manufacturing, and services

Nigerians need access, not austerity. They need the means to be productive, not the burden of additional economic restraint. A nation cannot borrow its way into solvency, but neither can it cut its way into prosperity.

Conclusion

The real question isn’t whether Nigeria’s budget should be trimmed by a few trillion naira. The question is: will those cuts create jobs, feed families, and unlock opportunity? Or will they tighten the noose on a struggling population?

A rigid economic script cannot solve a dynamic national problem. Nigeria must write its own recovery story—one that places people, not just figures, at the center of its fiscal policy.

It is time to open the gates to inclusive, credit-powered growth—and close the door on prescriptions that deepen the suffering of the many to reassure the comfort of the few.