IMF Raises Alarm Over Nigeria’s Worsening Revenue Losses from Illicit Financial Flows

Washington D.C. — The International Monetary Fund (IMF) has expressed concern over the growing illicit financial flows (IFFs) from Nigeria, warning that they are deepening the country’s revenue challenges and undermining economic stability.

Speaking at the 2025 IMF–World Bank Annual Meetings in Washington D.C., IMF Managing Director Kristalina Georgieva said the Fund would intensify efforts to track and curb illegal financial movements draining public resources in developing economies like Nigeria.

“We believe that for countries like Nigeria, the IMF’s renewed focus on tracing Illicit Financial Flows could provide a blueprint for plugging the fiscal leakages that have long undermined revenue generation and sustainable growth,” Georgieva said.

She described illicit financial flows — including stolen public funds, proceeds of crime, and untraceable digital transactions — as a major global threat eroding governance systems and stifling development.

“You may have money plainly stolen from taxpayers or private funds directed to criminal activities undermining citizens’ welfare,” she added. “Now with digital money, such activities can be funded without being traced. This is a serious problem, and we have to take it as such.”

IMF Strengthens Anti-Money Laundering Framework

In response, Georgieva said the IMF has strengthened its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework following a comprehensive review in 2023.

She explained that “following the money” is now a mandatory part of the IMF’s Article IV consultations, ensuring member countries are routinely assessed for exposure to illicit flows and financial integrity risks.

The IMF will also require countries seeking its financial assistance to include measures addressing systemic illicit financial flow problems in their program designs.

“We need to train country authorities so they can trace illicit financial flows, be more alert, and act quickly,” Georgieva said. “Digital tools help in tracking money, but they also create new avenues for evading oversight.”

Focus on Governance and Institutional Reform

The IMF boss stressed that tackling illicit financial flows requires stronger governance and institutional integrity. Through its Governance Diagnostics Initiative, the Fund helps countries identify and fix structural weaknesses that enable corruption and financial crimes.

“The governance diagnostic is not an audit. It’s about identifying vulnerabilities in institutional setups — the breeding grounds for problems — and proposing reforms to address them,” Georgieva explained.

She also urged greater collaboration between governments, civil society, and international partners in combating the menace.

“We ask our teams to engage with civil society and non-government institutions because they often know where the vulnerabilities lie. Working together, we can build trust and achieve more,” she said.

Georgieva cited Sri Lanka and Kenya as examples of countries working with the IMF to strengthen governance frameworks and combat financial crimes.

IMF Upgrades Nigeria’s Growth Outlook

Despite fiscal leakages, the IMF has raised Nigeria’s 2025 economic growth projection to 3.9 percent, up from 3.4 percent in its July forecast, citing stronger fundamentals and improved investor confidence.

According to the IMF’s October 2025 World Economic Outlook (WEO) titled “Global Economy in Flux,” Nigeria’s growth, though slightly below the 4.1 percent recorded in 2024, is expected to accelerate to 4.2 percent in 2026.

The Fund attributed the improved outlook to higher oil production, a more supportive fiscal stance, and renewed capital inflows driven by reforms in the energy and financial sectors. Exchange rate adjustments have also improved transparency in the foreign exchange market.

However, inflation remains a major concern. The IMF projects that Nigeria’s average consumer prices will fall from 31.4 percent in 2024 to 23.0 percent in 2025, and 22.0 percent in 2026. End-of-period inflation is expected at 21 percent in 2025 and 18 percent in 2026.

Nigeria’s current account surplus is forecast to narrow from 6.8 percent of GDP in 2024 to 5.7 percent in 2025, and further to 3.6 percent in 2026, as imports rise alongside oil export gains.

The report also confirmed that Nigeria’s recent GDP rebasing, using 2019 as the new base year, expanded the economy’s nominal size by over 40 percent by capturing previously underreported sectors such as the digital economy, informal agriculture, and modular refining.

“For 2025, we have revised Nigeria’s growth rate upward to 3.9 percent,” said Denz Igan, Division Chief in the IMF Research Department. “This reflects reduced uncertainty, stronger investor confidence, higher oil output, and improved security in producing regions.”

Sub-Saharan Africa Outlook

For Sub-Saharan Africa, the IMF upgraded its growth forecast to 4.1 percent in 2025 and 4.4 percent in 2026, supported by reform efforts in countries such as Nigeria and Ethiopia.

“This resilience has been underpinned by macroeconomic stabilisation and ongoing reforms,” Igan noted. “However, vulnerabilities remain, especially for resource-dependent and conflict-affected economies.”

He urged African nations to strengthen institutions, deepen structural reforms, and improve domestic revenue mobilisation to sustain growth momentum.

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