The International Monetary Fund (IMF) has cut its growth forecast for Nigeria as the oil-exporting country faces considerable challenges from low crude prices.
The IMF, in its annual review of Nigeria's economic situation, said that GDP growth would slow to 2.3% this year, from an estimated 2.7% last year. It further stated that the country's general government deficit would grow further, after doubling to 3.7% of GDP in 2015.
The IMF said in a statement:
"Key risks to the outlook include lower oil prices, shortfalls in non-oil revenues, a further deterioration in finances of state and local governments, deepening disruptions in private sector activity due to constraints on access to foreign exchange, and resurgence in security concerns."
The IMF's executive board further noted that Nigeria should immediately implement policies to safeguard fiscal sustainability, and urged a gradual increase in the VAT rate, further improvements in revenue administration, and a broadening of the tax base.
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