IMF Pushes Nigeria Toward New Taxes on Fuel and Telecoms to Close Revenue Gap
The report notes that debt servicing consumes a large share of government revenue, with roughly half of tax income currently directed toward interest payments.
The International Monetary Fund has recommended that Nigeria consider introducing new taxes on telecommunications services and extending value-added tax (VAT) to fuel products as part of broader efforts to strengthen government revenue. The advice was published in the IMF’s 2026 Article IV Consultation report, which assessed Nigeria’s fiscal position and warned that current revenue levels are not sufficient to support the country’s planned capital spending over the medium term.
In its assessment, the IMF argued that although recent tax reforms in Nigeria represent progress, additional measures are still needed to create fiscal space for infrastructure development and social spending, including healthcare and education. The Fund suggested raising the VAT rate, reducing tax exemptions—particularly in the extractive sector and some customs areas—and introducing excise duties on telecom services. It also noted that improvements in tax administration through digital systems would help, but would not be enough on their own to close the widening revenue gap.
The report also highlighted the difficult social context in which any new tax policies would be implemented. It noted that poverty levels remain high and food insecurity affects tens of millions of people, meaning that any tax expansion would need to be carefully phased and supported by effective social protection systems. The IMF stressed that cash transfer programs should be adequately funded and in place to cushion vulnerable households before additional fiscal burdens are introduced.
Reactions to the proposals have been mixed within Nigeria. The telecommunications sector has strongly resisted similar proposals in the past, including a previously suspended 5 percent excise duty on telecom services. Industry groups and consumer advocates, including the National Association of Telecom Subscribers of Nigeria (NATCOMS), argue that the sector already faces numerous taxes and levies, and warn that new charges would likely be passed on to consumers, potentially increasing the digital divide.
On fuel taxation, labor unions and private sector stakeholders have also raised concerns, citing the already high cost of living and recent price increases in energy-related goods and services. Critics argue that additional fuel-related taxes could worsen inflationary pressures and further strain household finances.
Despite these concerns, the IMF maintains that Nigeria’s public debt remains broadly sustainable, though it classifies the country as facing a moderate risk of debt stress. The report notes that debt servicing consumes a large share of government revenue, with roughly half of tax income currently directed toward interest payments. Christian Ebeke emphasized that while Nigeria’s debt-to-GDP ratio remains relatively low compared to peers, the heavy debt service burden limits fiscal flexibility and underscores the need for stronger revenue mobilization and improved fiscal transparency.
