The International Monetary Fund (IMF) has recommended that the Nigerian government implement excise duties on telecommunications services and extend Value Added Tax (VAT) to fuel products. These measures are proposed as part of broader efforts to strengthen the nation's revenue base.

In its latest Article IV consultation report on Nigeria, the Fund stated that additional tax policy reforms are necessary over the medium term to create sufficient fiscal space for development spending and social interventions. The IMF cautioned that the current pace of capital expenditure may not be sustainable without stronger revenue growth.

These recommendations come at a time of significantly high fuel prices and a recent 50% increase in telecom tariffs. The IMF acknowledged that while the robust implementation of Nigeria’s new tax laws should gradually improve revenue collection, it may not be enough to meet the country's fiscal needs.

The Fund suggested that further tax policy changes, such as increasing the VAT rate, extending VAT to fuel products, rationalizing tax expenditures (particularly VAT exemptions on extractive industries and some customs duties), and introducing telecom excises, would complement administrative gains. However, the IMF stressed that the timing of such reforms must consider rising poverty levels and food insecurity across the country.

The IMF advised Nigerian authorities to ensure an effective and well-funded cash transfer system is in place before introducing additional tax measures that could exacerbate cost-of-living pressures. The Fund also urged Nigeria to deepen the use of digital technology in revenue administration to reduce leakages and curb corruption vulnerabilities.

Previously, in September 2025, the Federal Government had announced the scrapping of the 5% excise duty on telecommunications services, which was initially introduced in 2022. This tax had covered both voice and data services and faced criticism from telecom operators who cited numerous existing taxes and levies.

The Centre for the Promotion of Private Enterprise (CPPE) has warned against prolonged monetary tightening and Nigeria’s increasing reliance on foreign portfolio inflows. The CPPE stated that these factors could undermine long-term economic growth, despite recent improvements in macroeconomic stability.

While acknowledging the progress in stabilizing the economy and restoring investor confidence, the CPPE argued for greater policy balance to ensure sustainable economic growth. The organization expressed concern over the IMF’s continued support for tight monetary conditions, noting that the current interest-rate environment is becoming increasingly restrictive for businesses and productive investment.

According to the CPPE, lending rates in Nigeria remain among the highest globally, hindering business expansion, productive capacity investment, and job creation. The organization added that while monetary tightening has helped moderate inflation and stabilize the foreign exchange market, there is a risk that the economic costs of the policy may begin to outweigh its benefits.

The CPPE also warned that prolonged high interest rates are increasing the cost of domestic borrowing and worsening debt-service obligations, with a growing share of government revenue being consumed by debt servicing. The organization welcomed indications from the Federal Government about plans to refinance portions of its debt portfolio to reduce borrowing costs.

Nigeria’s Monetary Policy Rate (MPR) has undergone significant tightening since 2023. The CBN raised the benchmark rate six consecutive times in 2024, taking it from 18.75% to 27.50% by November 2024. After a pause in 2025, an easing cycle began in September 2025, with the MPR reduced to 27.00%, followed by another cut in February 2026 to 26.50%.

The CPPE’s intervention highlights the ongoing debate on balancing macroeconomic stability with economic growth, inclusion, and long-term transformation. The organization believes the next phase of reforms should focus on converting recent economic gains into jobs, lower living costs, and broad-based prosperity.