The International Monetary Fund (IMF) has urged the Nigerian government to introduce new taxes on fuel and telecommunications services as part of efforts to increase government revenue. The recommendation, if implemented, is expected to raise the cost of petrol, airtime, and data.
IMF Report Highlights Need for Additional Fiscal Reforms
In its 2026 Article IV Consultation report on Nigeria, the IMF stated that further fiscal reforms are required to strengthen revenue mobilization amid spending pressures. The Fund encouraged the federal government to consider increasing the Value Added Tax (VAT) rate from the current 7.5% and closing tax loopholes in key sectors. The proposed measures, combined with improved tax compliance, are projected to raise revenue by 3.9% of GDP over the medium term.
The IMF also noted that strengthening tax enforcement and digitalizing revenue collection processes could generate an additional 3.1% of GDP by reducing leakages and informality. However, the Fund warned that any tax increases should be appropriately timed, given Nigeria's deteriorating levels of poverty and food insecurity. It emphasized the need for a well-functioning cash transfer system before introducing new consumption-based taxes.
Previous Attempts at Telecom Tax Withdrawn
The federal government's earlier attempt to introduce a 5% excise tax on telecommunications services was withdrawn due to opposition from telecom operators and consumers, who argued it would raise communication costs amid already high prices. Telecom operators have stated that they often pass on new levies to consumers through higher charges. Labour unions and businesses have also opposed fuel-related taxes due to their direct impact on transport and food costs.
The IMF acknowledged that higher export revenues and fiscal inflows from favorable world commodity prices could help reduce inflation and ease difficulties for poor households, but might simultaneously increase food costs. The Fund earlier projected Nigeria's economic growth at 4% in 2025 and 4.1% in 2026, despite ongoing cost-of-living pressures.
Expert Opinion on IMF Proposal
Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), commented on the IMF's advice. He welcomed the positive assessment of Nigeria's economic reforms but warned against policies that could harm citizens' livelihoods. He stated, "The next phase of economic management should focus on converting macroeconomic gains into welfare gains. The challenge before policymakers is no longer merely economic stabilization but inclusive prosperity."
Previously, Legit.ng reported on the list of African countries with the lowest IMF debt, highlighting that nations with lower IMF obligations have greater flexibility to fund development projects and navigate economic uncertainty.
