Nigeria’s Debt-To-GDP May Hit 33.1% On Fresh Loans, IMF Warns

The International Monetary Fund (IMF) has projected that Nigeria’s debt-to-gross domestic product (GDP) ratio will rise to 33.1 per cent by 2027, underscoring growing fiscal pressures amid increasing borrowing and a challenging global economic environment.

The projection, contained in the IMF’s latest Fiscal Monitor Report released in Washington, D.C., during the ongoing Spring Meetings of the IMF and the World Bank, reflects a gradual uptick from an estimated 32.3 per cent in 2026.

The Fund also put Nigeria’s debt-to-GDP ratio at 35.3 per cent in 2025, indicating a slightly moderating trajectory before the anticipated increase.
The IMF’s outlook comes against the backdrop of fresh borrowing plans by the Nigerian government, following President Bola Tinubu’s request to the National Assembly for approval of external loans totalling $6 billion.

Analysts say the move could further shape the country’s debt dynamics in the medium term.
Recent data released by the Debt Management Office (DMO) show that Nigeria’s total public debt stock rose to N159.27trn as of the end of the fourth quarter of 2025.

This represents an increase of N5.98 trillion from N153.29 trillion recorded at the end of the third quarter of 2025, and a year-on-year rise of N14.6trn compared to N144.67trn in the corresponding period of 2024.

While Nigeria’s debt-to-GDP ratio remains relatively moderate compared to some peer economies, concerns persist over the country’s debt sustainability, particularly given its weak revenue base and rising debt servicing costs.

Globally, the IMF warned of a deteriorating fiscal outlook despite signs of economic resilience. According to the report, global gross government debt climbed to nearly 94 per cent of GDP in 2025 and is projected to approach 100 per cent by 2029, a level last seen in the aftermath of World War II.

The Fund further noted that global debt-at-risk a measure of potential adverse debt outcomes, is projected to reach about 117 per cent of GDP over the next three years, highlighting significant downside risks.

It identified multiple factors that could exacerbate fiscal vulnerabilities, including geopolitical tensions, tighter financial conditions, and weaker economic activity.
In particular, the IMF cautioned that escalating conflict in the Middle East could intensify fiscal strains through higher energy and food prices, increased defence spending, and reduced economic output. A prolonged conflict could push global debt-at-risk up by an additional four percentage points.

The report also flagged risks associated with financial market corrections, noting that a potential 20 per cent decline in artificial intelligence-related asset valuations in the United States with spillover effects globally could raise debt-at-risk by a further 2.4 percentage points.

Speaking to journalists, the IMF’s Director of Fiscal Affairs, Rodrigo Valdés, stressed the importance of building fiscal buffers during stable periods to enhance countries’ ability to respond to economic shocks.

“Crisis, of course, requires emergency support, and people focus on the crisis, but the ability to respond really depends on pre-existing fiscal space,” Valdés said. “Too often, the needed consolidation is postponed, and that only increases pressure on fiscal space ahead of the next crisis.”

He urged governments, particularly in low-income and developing economies, to prioritise domestic revenue mobilisation as a means of safeguarding critical social and development spending, especially in the face of declining external aid.

Valdés also cautioned against the use of broad-based energy subsidies or tax cuts as fiscal tools, noting that such measures are costly, distort market signals, and are difficult to reverse.

He added that discretionary demand stimulus should be avoided unless economic conditions significantly deteriorate, warning that such actions could complicate efforts by central banks to control inflation.

With global debt levels already elevated, the IMF emphasised that fiscal policy responses must be carefully calibrated to avoid further jeopardising public finances, while maintaining a credible path toward medium-term fiscal consolidation.