IMF urges Nigeria to raise taxes amid cost of living crisis

The International Monetary Fund has recommended that Nigeria consider higher taxes, including extending Value Added Tax to fuel and imposing new excise duties on telecommunications services, to boost government revenues. The advice, detailed in the Fund's 2026 Article IV Consultation report published on June 9, has drawn significant criticism from Nigerian citizens and economic experts who warn it would worsen a severe cost-of-living crisis.

In its report, the IMF stated that further tax policy changes would likely be needed to create fiscal space for development spending and social programs. The measures suggested include increasing the VAT rate, extending VAT to petroleum products, reducing tax exemptions, and introducing new telecom excises. The Fund noted that while recent tax reforms are positive, they are expected to reduce revenue in the short term, and Nigeria’s persistently low revenue-to-GDP ratio requires additional action to support critical spending. The IMF also cautioned that the timing of any new taxes must account for the country's deep poverty and food insecurity, recommending they be paired with a fully funded cash transfer program to protect vulnerable...