The International Monetary Fund (IMF) on Thursday maintained its growth forecast of 3.3% for Nigeria's economy for 2024, up from 2.9% last year, citing a pick up in services and trade sectors.

It added that outlook for growth was still challenging in Africa's most populous nation and top oil producer, with food price inflation which reached 40% in March, raising food security concern.

"If Nigeria grows at 3.3% that is just above the population dynamics, which is a big challenge," IMF's Axel Schimmelpfenning told journalists.

Since taking office about a year ago, President Bola Tinubu has embarked on sweeping reforms, including slashing costly petrol and electricity subsidies and devaluing the naira currency twice within a year to narrow the gap between the official and parallel market exchange rates.

"The reforms are focused on how to raise that growth so that Nigerians can sees real impacts on their living standards," Schimmelpfenning said.

Credit ratings agencies have reviewed Nigeria's economic outlook upwards on the impact of reforms.

"We think a lot has happened. We also have to recognize that the problems built up over many years were quiet severe. We can't expect that everything is going to be resolved overnight," he added.

Schimmelpfenning, IMF mission chief for Nigeria, said scaling up the government's cash transfer system and government revenues so that the country has more resources to provide services to its citizens is a key priority.

The Fund forecast that fuel subsidy could cost up to 3% of GDP this year as the increases in pump prices have not kept up with their dollar cost, Schimmelpfennig said, adding that officials remain committed to phasing out fuel subsidy in another one or two years.