The International Monetary Fund, IMF, has decried Illicit Financial Flows, IFFs out of Nigeria, noting that it was contributing to the worsening revenue problem of the country.

The Managing Director of the global institution, Ms. Kristalina Georgieva, who stated this at the ongoing 2025 Annual Meetings of the IMF and World Bank in Washington DC, promised renewed focus on tracing such flows to plug fiscal leakages.

She said: “We believe that for countries like Nigeria, the IMF’s renewed focus on tracing Illicit Financial Flows could provide a blueprint for plugging the fiscal leakages that have long undermined revenue generation and sustainable growth”.

Georgieva warned of the growing threat of illicit financial flows, IFFs, phenomenon which, she said, had become a major factor undermining the economic and financial stability of nations across the globe.

According to her, illicit financial flows which include stolen public funds, proceeds from criminal activities, and untraceable digital transactions, continue to erode governance systems, drain public resources, and cripple developmental efforts, especially in developing economies.

In a recent policy briefing, IMF officials had noted that IFFs now come in “multiple dimensions.” These range from outright embezzlement of taxpayers’ money to private funds channeled into illegal ventures that threaten national welfare.

The digital economy, they added, had further complicated the challenge with cryptocurrencies, such as Bitcoin, providing an avenue for anonymous financial transactions.

The IMF boss said:”You may have money, just plainly stolen money that belongs to the taxpayers. You may have private money directed for criminal activities undermining the welfare of citizens.

“Now with digital money, criminal activities can be funded without being traced. This is a serious problem, and we have to take it as such.”

In response, the IMF disclosed that it had strengthened its Anti-Money Laundering and Combating the Financing of Terrorism, AML/CFT, framework, following a comprehensive review in 2023.

She said: “Following the money has now become a compulsory part of the IMF’s annual Article IV consultations — the standard economic health check for member countries.

‘’This ensures that the fund routinely assesses each nation’s exposure to illicit flows and financial integrity risks.”

The MD added that the IMF was embedding lessons from past experiences into its financial sector evaluation tools to better trace illicit transactions and vulnerabilities.

In addition, she said for countries seeking IMF financial assistance, any program design would now include specific measures to address the problem of illicit flows, particularly where such challenges are deemed systemic.

Ms. Georgieva also said the Fund was supporting member countries through technical assistance and training to enable local authorities detect, trace and respond effectively to suspicious financial activities.

“We need to train country authorities so they can trace illicit financial flows, be more alert, and act quickly. Digital tools help in tracking money, but they also create new avenues for evading oversight,’’ she added.

Governance and the way forward

The MD emphasised that curbing illicit financial flows goes beyond financial systems to the very core of governance and institutional integrity.

She said through its Governance Diagnostics initiative, the Fund was helping countries identify structural weaknesses that allowed corruption and financial crimes to thrive.

“The governance diagnostic is not an audit, it is about identifying vulnerabilities in the institutional setup, the breeding grounds for problems and proposing reforms to address them,” the IMF boss said.

She encouraged greater collaboration among government agencies, civil society organizations, and international partners in tackling the menace.

Her words: “We ask our teams to engage with civil society and non-government institutions because they often know where the vulnerabilities lie. Working together, we can build trust and achieve more.”

She commended ongoing partnerships with countries, such as Sri Lanka and Kenya, which have embraced collaborative frameworks to combat financial crimes while strengthening governance structures.

Meanwhile, the IMF has revised Nigeria’s economic growth outlook upward to 3.9 per cent, citing stronger domestic fundamentals and improving investor confidence, as well as moderated impact of global tariff war.

The outlook represents a 0.5 percentage point increase from the IMF’s July 2025 update and nearly 1 percentage point higher than earlier April forecasts.

Disclosing this in its October 2025 World Economic Outlook (WEO) titled “Global Economy in Flux”, the IMF projected that Nigeria’s real Gross Domestic Product (GDP) will grow by 3.9 percent in 2025, slightly lower than the 4.1 percent recorded in 2024, but expected to accelerate to 4.2 percent in 2026.

Similarly, the IMF upgraded its forecast for Sub Saharan Africa economic growth to 4.1 per cent and 4.2 per cent in 2025 and 2026 respectively.

However, the IMF revised downward its global economic growth forecast to 2.8 per cent, representing 0.2 percentage points from 3.0 per cent earlier forecast in the April 2025 World Economic Outlook (WEO).

Nigeria

It attributed Nigeria’s growth resilience to higher oil production, a more supportive fiscal stance, and improving investor sentiment. The report noted that reforms in the energy and financial sectors have begun to attract renewed capital inflows, while exchange rate adjustments have improved transparency in the foreign exchange market.

The Fund also observed that Nigeria’s economy is less exposed to the global tariff wars triggered by new U.S. trade measures, which have weakened growth prospects in many advanced economies.

Despite the growth optimism, inflation remains elevated. The IMF forecasts that Nigeria’s average consumer prices will decline from 31.4 per cent in 2024 to 23.0 per cent in 2025, and further to 22.0 per cent in 2026.

End-of-period inflation is projected at 21 per cent in 2025 and 18 per cent in 2026, reflecting slow disinflation amid persistent food and energy price pressures.

Nigeria’s current account surplus is expected to narrow from 6.8 per cent of GDP in 2024 to 5.7 per cent in 2025, and further to 3.6 per cent in 2026, as higher imports offset oil export gains.
The IMF noted that the projections incorporate a major rebasing of Nigeria’s national accounts, with 2019 adopted as the new base year.

The revised data now capture previously underreported sectors, including the digital economy, informal agriculture, and modular refining activities, raising nominal GDP by over 40 per cent.

While welcoming the upward revision, the IMF urged Nigeria to sustain credible fiscal and monetary policies, strengthen institutional frameworks, and accelerate reforms to entrench macroeconomic stability and inclusive growth.

Speaking on Nigeria’s Growth Outlook, at the press briefing on the WEO, Denz Igan, Division Chief, Research Department, IMF, said: “For 2025, we have revised Nigeria’s growth rate upward to 3.9 per cent, which is 0.5 percentage point higher than our previous projection.

‘’We have also upgraded the 2026 forecast by 0.9 percentage point, to 4.2 per cent. Looking back, the 2024 GDP growth estimate has been revised upward to 4.1 per cent, 0.7 percentage point higher than earlier figures.

‘’This reflects the authorities’ GDP revision and rebasing exercise, which provides broader coverage of economic activity, including parts of the informal sector previously not captured.

“For 2025 and 2026, the upward revisions mainly reflect reduced uncertainty and Nigeria’s limited exposure to U.S. tariffs, given its relatively low dependence on global trade.

‘’Since July, we’ve also seen exchange rate appreciation, stronger financial conditions supported by rising investor confidence, and a supportive fiscal stance.

“In addition, hydrocarbon growth has been revised upward due to higher oil production and improved security in producing areas. Together, these factors contribute to a more positive outlook for Nigeria’s economy.”

Sub-Saharan Africa

Speaking on the new forecast for Sub-Saharan Africa, Igan, said: “For Sub-Saharan Africa, we have upgraded growth projections. Growth for 2025 has been revised up by 0.2 percentage point, and the same applies to 2026. We now project 4.1 per cent growth this year and 4.4 per cent next year.

“This resilience across the region has been supported by macroeconomic stabilisation measures and ongoing reform efforts in several key economies — notably Ethiopia and Nigeria.

“That said, vulnerabilities remain. Resource-dependent and conflict-affected countries continue to face significant headwinds, and our medium-term outlook indicates that low-income economies in the region are still grappling with a widening per capita income gap compared to advanced economies.

“In such an environment, it is crucial for countries to strengthen institutions, deepen structural reforms, and mobilise domestic revenue through effective tax reforms. Additionally, improving debt management, transparency, and governance, alongside broader structural reforms, will be key to unlocking the region’s economic potential.”