Nigeria’s debt-to-gross domestic product (GDP) ratio is projected to rise to 33.1 percent by 2027, according to the International Monetary Fund’s latest Fiscal Monitor Report. This forecast, released during the IMF-World Bank spring meetings in Washington, D.C., represents a slight increase from the expected 32.3 percent in 2026. The report follows President Bola Tinubu’s request for parliamentary approval of $6 billion in external borrowing. Additionally, the IMF anticipates Nigeria’s debt-to-GDP ratio will reach 35.3 percent by 2025, reflecting ongoing pressure on public finances as the government seeks to fund development initiatives and address economic challenges.
Globally, gross government debt is expected to approach 94 percent of GDP by 2025, with projections suggesting it could reach 100 percent by 2029, a level last seen in the aftermath of World War II. The IMF warns that global debt-at-risk could climb to nearly 117 percent of GDP within three years, highlighting a significant gap between median projections and potential downside risks. Rodrigo Valdés, director of the IMF’s Fiscal Affairs Department, emphasized the importance of maintaining fiscal space for future crises, cautioning that delays in fiscal consolidation could necessitate steeper adjustments later.
As of the end of the fourth quarter of 2024, Nigeria’s total public debt, which includes both federal and state governments, rose to N159.27 trillion, up from N144.67 trillion a year earlier, according to the Debt Management Office. This upward trend aligns with the IMF’s concerns regarding deteriorating fiscal outlooks in many economies. The IMF also flagged geopolitical risks, such as prolonged conflict in the Middle East, which could further increase global debt-at-risk by an additional 4 percentage points due to higher fuel and food prices, tighter financial conditions, and increased defense spending. Furthermore, a sharp correction in artificial intelligence-related asset valuations could add another 2.4 percentage points to debt-at-risk.
For low-income developing economies like Nigeria, the IMF advises prioritizing domestic revenue mobilization to protect social and development spending, noting that external aid alone cannot bridge the gap. The report suggests that fiscal policy should avoid discretionary stimulus unless conditions change dramatically, as such measures could complicate inflation control and further strain public finances. It also discourages broad-based energy subsidies and excise reductions, as these distort price signals, are fiscally costly, and are difficult to reverse. Ultimately, the report underscores the need for credible medium-term fiscal frameworks and clear communication to anchor market confidence and prevent disorderly consolidation in the future.
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