Budget Delays, Politics Threaten IMF Growth Forecast

Economic analysts have warned that Nigeria’s improved growth outlook for 2026 could be undermined by delays in the passage of the federal budget and rising political activities ahead of the next general elections, despite the International Monetary Fund’s recent upward revision of its forecast.

In its January 2026 World Economic Outlook, the IMF projected that Nigeria’s economy would expand by 4.4 per cent in 2026, positioning the country as a key driver of growth in sub-Saharan Africa. The Fund expects the region’s overall growth rate to strengthen from 4.4 per cent in 2025 to 4.6 per cent in both 2026 and 2027, supported by macroeconomic stabilisation and reform efforts in major economies, including Nigeria.

The IMF’s forecast broadly aligns with estimates from local research firms. Afrinvest, in its 2026 Macroeconomic Outlook, projected a growth rate of 4.3 per cent, while EnterpriseNGR, a private-sector policy and advocacy group, placed its estimate slightly higher at 4.49 per cent, citing anticipated expansion across services, agriculture, trade, and telecommunications.

Afrinvest attributed its outlook to sustained private-sector investments across strategic industries. These include ongoing 5G infrastructure expansion by MTN Nigeria and Airtel Africa, increased activity in the oil and gas sector driven by the Dangote Refinery expansion and Tony Elumelu’s acquisition of a controlling stake in Seplat Energy, agricultural investments such as KONIG Agriculture’s $42m project in Ondo State, and sector-wide recapitalisation in finance and insurance. The firm also expects elevated domestic yields to attract foreign portfolio inflows through carry-trade opportunities, reinforcing growth momentum in 2026.

However, analysts cautioned that several downside risks could derail these projections. Afrinvest noted that unresolved geopolitical tensions, intensifying pre-election politicking, and slow progress on fiscal planning pose significant threats to Nigeria’s growth outlook. The firm pointed out that the proposed N58.2tn 2026 federal budget has yet to be passed, a delay that could disrupt government spending and investor confidence.

In addition, Afrinvest warned that Nigeria remains vulnerable to global economic headwinds. It highlighted the IMF’s projection of weaker global trade growth in 2026, expected to slow to 2.6 per cent from 4.1 per cent in 2025. This could negatively affect Nigeria, given its heavy reliance on crude oil exports, which account for about 85 per cent of total export earnings and are projected to contribute more than one-third of the Federal Government’s targeted revenue for 2026.

The firm stressed that prudent fiscal management, easing political tensions, and the implementation of inclusive, growth-oriented policies would be critical for navigating both domestic and global risks in the near term.

President Bola Tinubu recently presented a N58.18tn 2026 Appropriation Bill to the National Assembly, though the budget has yet to be enacted. The proposal projects total revenue of N34.33tn, capital expenditure of N26.08tn, recurrent non-debt spending of N15.25tn, and debt servicing costs of N15.52tn, resulting in a fiscal deficit of N23.85tn.

Meanwhile, EnterpriseNGR expressed cautious optimism about the oil and gas sector, projecting modest improvements driven by enhanced security, operational stability, and continued reforms in fiscal policy, foreign exchange management, and infrastructure investment. The group expects crude oil production to average 1.5 million barrels per day in 2026, with Brent crude prices hovering around $61 per barrel. It noted that Nigeria’s oil sector could achieve steadier performance, supported by domestic refining capacity and planned production expansion.