Nigeria’s debt-to-GDP ratio is projected to decline to 32.3 percent in 2026, down from 35.5 percent in 2025, according to the International Monetary Fund (IMF), offering a modest sign of fiscal improvement despite rising borrowing needs.
The projection was published in the IMF’s latest Fiscal Monitor report during the Spring Meetings in Washington, where policymakers are grappling with mounting global economic uncertainties.
The Fund expects Nigeria’s debt ratio to edge up slightly to 33.1 percent in 2027 before gradually declining to around 30.1 percent by 2031.
Despite the improved ratio, Nigeria’s overall debt stock continues to rise in nominal terms. The country’s Debt Management Office said total public debt for federal and state governments climbed to 159.27 trillion naira ($-equivalent) at the end of the fourth quarter of 2025.
That marks an increase of 5.98 trillion naira from the previous quarter and 14.6 trillion naira higher than the same period in 2024, underscoring the government’s continued reliance on borrowing to finance its budget.
The latest figures come as lawmakers approved new external borrowing plans. Nigeria’s parliament recently cleared a $6 billion loan request submitted by President Bola Tinubu, paving the way for additional financing from lenders in the United Arab Emirates and the United Kingdom.
The IMF cautioned that while debt ratios may appear manageable, fiscal pressures remain significant, particularly for low-income and emerging economies facing shrinking aid flows and tighter financial conditions.
“For many low-income developing countries, shrinking aid flows have shifted from a latent concern to a binding constraint on fiscal space,” the IMF said, warning that governments may be forced to cut spending on essential services such as healthcare, education and social protection.
Such fiscal tightening carries economic costs. The Fund estimates that a consolidation equivalent to 1 percent of GDP could reduce output by about 0.5 percent over two years in sub-Saharan Africa.
Globally, fiscal risks are also mounting. The IMF said the global fiscal deficit held steady at around 5 percent of GDP in 2025, while total public debt rose to 93.9 percent of global output.
Rising geopolitical tensions — particularly the conflict in the Middle East — are adding to fiscal strain through higher energy and food prices, tighter financing conditions and increased defence spending.
The Fund warned that global debt could reach 100 percent of GDP by 2029, a level last seen in the aftermath of World War II.
If the conflict persists, global debt-at-risk could rise by an additional four percentage points, reflecting heightened vulnerability to economic shocks and shifts in investor sentiment.
“Geoeconomic and political tensions have become a persistent feature of the fiscal landscape,” the IMF said, noting that structural vulnerabilities and changes in sovereign bond markets are amplifying risks for many countries.
Against this backdrop, the IMF urged governments to adopt more forward-looking fiscal strategies, including credible adjustment plans to maintain stability and avoid disruptive market pressures.
For Nigeria, analysts say the challenge will be balancing fiscal consolidation with the need to sustain growth and address pressing development needs, as rising debt servicing costs continue to weigh on public finances.
