Nigeria’s fiscal consolidation is viewed as “fragile” ahead of the 2026‑2027 election cycle, according to the latest Coronation Economic Note on the Q4 2025 Debt Report. The note warns that heightened pre‑election spending could erode recent gains in debt management.
The report shows Nigeria’s total public debt rising to a record N159.28 trillion. While the debt‑to‑GDP ratio appears manageable on paper, analysts describe a “critical paradox” in the country’s capacity to meet its obligations. The debt‑service‑to‑revenue ratio reached an estimated 113 percent in early 2025, meaning the federal government spent more on interest and principal repayments than it collected in total revenue.
“Nigeria’s fiscal consolidation story is still aspirational; it is fragile in execution,” the note states. It adds that any increase in spending before the 2026‑2027 elections would constitute a major risk variable for the fiscal outlook.
Despite an N109 trillion expansion in debt over the past three years, the government is effectively borrowing to repay existing loans. The International Monetary Fund projects Nigeria’s debt‑to‑GDP ratio will fall to 32.3 percent by 2026, well under the 55 percent distress threshold. Coronation analysts argue that the headline ratio masks deeper issues, chiefly an undersized revenue base.
Nigeria’s tax‑to‑GDP ratio stands at 9‑10 percent, far below regional peers such as South Africa (24 percent), Kenya (16 percent) and Ghana (13 percent). The analysts contend that the revenue base, rather than the size of the economy, is the binding constraint on debt sustainability.
The National Assembly’s recent approval of a new $6 billion external borrowing package underscores the continued reliance on debt. Experts stress that breaking the borrowing cycle will require aggressive revenue mobilisation instead of additional borrowing. “Revenue mobilisation, not debt‑management description, will determine whether the sustainability trajectory genuinely improves,” the report says.
The note calls for structural reforms, including stricter enforcement of the Fiscal Responsibility Act, to ensure that new borrowing is directed toward capital investment rather than day‑to‑day operational expenses. Without such measures, the anticipated “spending spike” in an election year could push Nigeria’s public finances toward a breaking point.
