IMF Advocates for Electricity Sector Reforms in Nigeria

The International Monetary Fund (IMF) has recommended that the Federal Government of Nigeria deepen reforms in the electricity sector to address the financial losses caused by tariffs that are below cost recovery levels. The IMF's 2026 Article IV consultation report highlights that these practices create significant financial losses and expose public finances to growing fiscal risks.

The report indicates that electricity sector arrears are expected to rise to 3.4% of Nigeria's gross domestic product (GDP) by the end of 2025, with an anticipated increase of 1.2% of GDP. The IMF's position comes as the Federal Government implements reforms aimed at improving the financial viability of the power sector and attracting fresh investments in electricity generation, transmission, and distribution infrastructure.

The report also emphasizes the importance of fiscal management and transparency, recommending the establishment of a framework to monitor fiscal risks, particularly those arising from state-owned enterprises in the energy sector.