Nigeria’s Debt-To-GDP Ratio Will Drop To 39.8% — World Bank

Nigeria’s public debt profile is set to improve significantly in 2025, with the World Bank projecting that the country’s debt-to-GDP ratio will fall from 42.9 per cent to 39.8 per cent, the first drop below 40 per cent in over a decade.

The development marks a milestone in Nigeria’s fiscal management efforts, driven by stronger non-oil revenues, prudent fiscal policies, and ongoing structural reforms.

The forecast was contained in the World Bank’s October 2025 Nigeria Development Update (NDU) titled “From Policy to People: Bringing the Reform Gains Home,” which provides a comprehensive assessment of the country’s economic outlook and reform progress.

According to the report, Nigeria’s economy has shown renewed momentum, with GDP growth rising to 3.9 per cent year-on-year in the first half of 2025, up from 3.5 per cent during the same period in 2024.

Growth was supported by robust activity in the services, agriculture, and non-oil sectors, alongside improvements in oil production and exports.

The World Bank expects the economy to expand further from 4.2 per cent in 2025 to 4.4 per cent in 2027, noting that the country’s recovery is being underpinned by structural adjustments, market reforms, and stronger private sector participation.

“Nigeria’s economy has shown notable resilience amid a challenging global environment,” the Bank stated.

“The country’s external position has strengthened, with foreign reserves exceeding $42bn and the current account surplus rising to 6.1 per cent of GDP, supported by higher non-oil exports and lower oil imports.”

On the fiscal front, the World Bank projected that Nigeria’s federal budget deficit will remain at 2.6 per cent of GDP in 2025, nearly unchanged from 2024, despite lower oil prices.

It said this stability demonstrates tighter fiscal controls, sustained revenue mobilisation, and improved public financial management under ongoing reforms.

The report, however, cautioned that inflation remains a key risk to the sustainability of Nigeria’s recovery.

Although headline inflation is expected to ease gradually, it will remain elevated, driven largely by persistent food price pressures and high input costs.

The World Bank’s Senior Economist for Nigeria, Samer Matta, noted that curbing inflation is vital to protecting household welfare.

“Food inflation continues to impose the biggest tax on the poor,” he said. “Sustained monetary discipline and policy consistency are needed to ensure price stability and strengthen purchasing power.”

In his remarks, the World Bank Country Director for Nigeria, Mathew Verghis commended the government’s reform drive, noting that fiscal consolidation and market adjustments are beginning to yield results.

“The Nigerian government has taken bold steps to stabilise the economy, and these efforts are showing measurable progress,” he said.

“But macroeconomic stability alone is not enough. The real test of reform success is whether it improves the daily lives of Nigerian, especially the poor and vulnerable.”

Despite the improving macroeconomic indicators, the report underscored that many Nigerians are yet to feel the positive impact of these reforms.

It highlighted that poverty and food insecurity remain elevated, with the cost of a basic food basket increasing nearly fivefold between 2019 and 2024.

Poor households who spend up to 70 per cent of their income on food, have been disproportionately affected by rising prices.

The World Bank emphasised that while Nigeria’s current reforms are correcting deep-seated policy distortions, sustained gains in living standards will depend on efforts to reduce inflation, strengthen social safety nets, and foster inclusive growth.

The report urged the government to deepen ongoing reforms, expand access to basic services, and channel fiscal savings into targeted social investments.

With the public debt-to-GDP ratio projected to fall below 40 per cent, foreign reserves firming above $42bn, and economic growth expected to rise to 4.4 per cent by 2027, the World Bank expressed cautious optimism about Nigeria’s medium-term outlook.

However, it stressed that maintaining momentum will require policy consistency, disciplined fiscal management, and continued efforts to ensure that reform gains translate into real economic relief for millions of Nigerian households.