The International Monetary Fund (IMF) has urged the Federal Government to introduce targeted cash transfers and temporary income support for vulnerable households to ease the impact of rising living costs in Nigeria.
The Fund said the measures would help reduce poverty and improve food security while protecting low-income households from the effects of high food and energy prices.
Deniz Igan, Chief of the IMF Research Department’s World Economic Studies Division, made the recommendation during a briefing on the Fund’s World Economic Outlook at the ongoing IMF and World Bank Annual Meetings in Thailand.
Igan noted that despite Nigeria’s economic growth and status as an energy-exporting country, many citizens continued to struggle with high living costs.
“Although economic growth has held up in Nigeria, given that it is an energy exporter, living costs are still very high, and we are very mindful that the population is suffering,” she said.
She explained that rising prices of essential goods, particularly food and energy, were placing significant pressure on households because the items account for a large share of their spending.
“In this environment, we advocate cash transfers and targeted, temporary income support for the most vulnerable households in Nigeria,” Igan said.
She added that the support could help ease immediate economic pressures on poor households, reduce poverty and strengthen food security.
The IMF stressed that social protection measures should be accompanied by fiscal reforms to enable the government to manage its finances sustainably without worsening economic hardship.
Igan called for a credible medium-term fiscal framework focused on improving the quality of public expenditure and strengthening revenue collection.
The measures, she said, would help the Federal Government consolidate its finances and gradually reduce public debt while maintaining support for vulnerable citizens.
The IMF also highlighted the challenge of balancing monetary policy measures to control inflation with the need to sustain economic activity, particularly when price increases are driven by supply-side shocks.
Igan explained that an oil price shock that raises inflation without a corresponding increase in demand presents a different policy challenge from inflation caused by strong consumer demand.
She said central banks must assess the source of inflation and its effects on economic activity before determining the appropriate response.
According to her, monetary authorities must continue to prioritise price stability and ensure inflation returns to target within the policy horizon, which the IMF typically considers to be two to three years.
She added that monetary policy should remain sufficiently restrictive to bring inflation under control while taking account of the impact on economic growth.
The appropriate response, she said, would depend on each country’s circumstances, including labour-market conditions, existing inflation levels and exposure to economic shocks.
For Nigeria, the IMF’s recommendations point to the need to combine stronger revenue mobilisation and more efficient public spending with temporary financial support for households most affected by rising prices.
