Illegal Financial Flows Out of Nigeria Worsening Country’s Revenue Problem — IMF
By Emeka Anaeto (Business Editor), Babajide Komolafe (Economy Editor), and Emma Ujah (Abuja Bureau Chief)
Reporting from Washington | October 15, 2025
The International Monetary Fund (IMF) has raised alarm over the growing scale of illicit financial flows (IFFs) from Nigeria, warning that they are worsening the nation’s revenue challenges and undermining fiscal stability.
IMF Managing Director, Kristalina Georgieva, speaking at the 2025 IMF-World Bank Annual Meetings in Washington DC, said the Fund will place renewed emphasis on tracing illegal money flows to help countries like Nigeria plug fiscal leakages.
“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 stated.
IMF: Illicit Flows Threaten Global Financial Stability
Georgieva described IFFs as a growing global menace that includes stolen public funds, proceeds from crime, and untraceable digital transactions that “erode governance systems, drain public resources, and cripple development efforts.”
She explained that illicit financial flows now occur across multiple dimensions, from embezzlement of public funds to private money diverted into illegal ventures.
The rise of cryptocurrencies and digital payments, she said, has made it easier for criminals to move funds anonymously.
“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,” she warned.
IMF Expands Global Anti-Money Laundering Efforts
The Fund disclosed that its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework was strengthened after a major review in 2023.
As part of its new approach, the IMF now includes “following the money” as a compulsory component of its Article IV consultations — the annual economic health check for member countries.
This means each country’s exposure to illicit financial flows and financial integrity risks will now be regularly assessed.
The Fund is also integrating past lessons into its Financial Sector Assessment Programs (FSAPs) to help nations detect and respond to suspicious transactions faster.
Governance and Institutional Reforms
Georgieva stressed that the fight against IFFs extends beyond the financial system to issues of governance and institutional integrity.
Through its Governance Diagnostics Initiative, the IMF helps countries identify structural weaknesses that enable corruption and financial crimes.
“The governance diagnostic is not an audit; it identifies vulnerabilities and recommends reforms,” she explained, urging closer collaboration between governments, civil society, and international partners.
She cited successful partnerships with Sri Lanka and Kenya, which have adopted joint frameworks to combat financial crimes while strengthening transparency.
IMF Upgrades Nigeria’s Economic Growth Forecast
Meanwhile, the IMF has upgraded Nigeria’s 2025 economic growth forecast to 3.9%, citing stronger domestic fundamentals and rising investor confidence.
This represents a 0.5 percentage point increase from the July projection and nearly 1 percentage point higher than the April forecast.
In its latest World Economic Outlook (WEO) report titled “Global Economy in Flux,” the Fund projected Nigeria’s real GDP growth at 3.9% in 2025 — slightly lower than 4.1% in 2024 — and expected to rise again to 4.2% in 2026.
Improving Fundamentals and Oil Output
The IMF attributed the upward revision to higher oil production, exchange rate transparency, energy sector reforms, and a supportive fiscal stance.
It noted that Nigeria’s economy has shown resilience despite global tariff wars and trade disruptions, adding that capital inflows have improved following structural adjustments.
Inflation, however, remains high but is expected to ease from 31.4% in 2024 to 23% in 2025, and to 22% by 2026, driven by moderate disinflation trends.
Nigeria’s current account surplus is projected to shrink from 6.8% of GDP in 2024 to 5.7% in 2025 and 3.6% in 2026, as rising imports offset oil export gains.
Rebased Economy and New Data Insights
The IMF also confirmed that Nigeria has rebased its national accounts, adopting 2019 as the new base year, which increased the size of the economy by over 40% due to the inclusion of previously underreported sectors such as digital economy, informal agriculture, and modular refining.
“For 2025, we have revised Nigeria’s growth rate upward to 3.9%, reflecting reduced uncertainty, higher oil production, and stronger investor confidence,” said Denz Igan, Division Chief at IMF’s Research Department.
Sub-Saharan Africa Outlook
For Sub-Saharan Africa, the IMF projected regional growth at 4.1% in 2025 and 4.4% in 2026, noting improvements in macroeconomic management, especially in Nigeria and Ethiopia.
However, it warned that resource-dependent and conflict-prone countries still face serious challenges and urged African nations to strengthen institutions, deepen reforms, and mobilize domestic revenue through effective tax systems.
“Improving debt transparency and governance will be key to unlocking the region’s economic potential,” Igan added.
Global Growth Slows
The IMF also downgraded its global economic growth forecast to 2.8% from 3.0% in April 2025, citing the impact of trade tensions and slower recoveries in advanced economies.
Despite global headwinds, Nigeria’s upgraded outlook signals optimism — provided the government tightens fiscal discipline, curbs illicit financial flows, and fosters credible monetary policy to sustain investor trust.
