Nigeria policy shift has led to success in monetary policy reform and a stronger balance of payments position. But reforms have so far fallen short is reining in the large budget deficit. While non-oil revenues have increased and our base case is that the debt-to-GDP ratio will inch down over the coming years, the public finances remain vulnerable to renewed falls in the naira, while there is a risk of fiscal slippage ahead of the 2027 elections. Without further improvements in fiscal policy, Nigeria will probably need to rely on financial repression policies to keep the public finances on a sustainable footing.
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