Nigeria’s Debt-to-GDP Ratio Projected to Reach 32.3% by 2026
The International Monetary Fund (IMF) has projected that Nigeria’s debt-to-gross domestic product (GDP) ratio will hit 32.3% in 2026. This forecast was included in the IMF’s Fiscal Monitor report, which was released during the IMF-World Bank Spring Meetings in Washington, DC.
Future Trends in Nigeria’s Debt Metrics
The IMF anticipates a decline in Nigeria’s debt-to-GDP ratio from 35.5% in 2025 to 32.3% in 2026, followed by a slight increase to 33.1% in 2027. By 2031, the organization’s projections suggest that Nigeria’s debt will stabilize at approximately 30.1% of GDP.
Fiscal Constraints Impacting Essential Services
In its report, the IMF highlighted the fiscal constraints faced by low-income emerging economies, indicating that these financial limitations could necessitate cuts in spending on vital public services, such as health, education, and social protection. Such reductions are likely to exacerbate existing poverty levels.
The report stated, “For many low-income developing countries, reduced aid flows have transitioned from a potential concern to a significant constraint on fiscal flexibility. Risks associated with fiscal adjustments may lead to cuts in essential services crucial for development and alleviating poverty.” The IMF further noted that a 1% increase in GDP may lead to a cumulative reduction in output in sub-Saharan Africa by approximately 0.5% over two years.
Update on Nigeria’s Public Debt
The Debt Management Office (DMO) recently announced that Nigeria’s total public debt has risen to N159.27 trillion as of the end of the fourth quarter of 2025. This marks an increase of N5.98 trillion from N153.29 trillion in the preceding quarter and N14.6 trillion from N144.67 trillion in the same period the previous year.
In a related development, on March 31, Premium Times reported that the House of Representatives had approved a request from President Bola Tinubu for $6 billion in external borrowing, thereby enabling the federal government to secure new loans from financial institutions located in the United Arab Emirates and the United Kingdom.
Global Debt Dynamics
The IMF’s report also indicated that the global budget deficit is expected to remain consistent at 5% of GDP in 2025, while the total public debt is projected to reach 93.9% of global GDP. The ongoing conflict in the Middle East poses significant risks, with predictions that global debt could reach a historical high of 100% by 2029, a level not seen since World War II.
According to the IMF, these geopolitical tensions may strain government finances through escalated food and fuel prices, tighter fiscal conditions, decreased economic activity, and increased defense spending. Prolonged conflict could drive global debt risk up by an additional 4 percentage points.
Policy Recommendations for Economic Stability
The international organization emphasized the necessity for proactive fiscal policies to maintain stability amid rising political tensions and their impact on the global economy. High debt levels, soaring interest costs, and restrictive market conditions are expected to limit fiscal maneuverability worldwide.
The IMF noted that “geoeconomic and political tensions are now an enduring aspect of the fiscal landscape, with structural vulnerabilities and fluctuations in government bond markets elevating countries’ susceptibility to shifts in investor sentiment.” It urged countries to implement well-structured adjustment plans designed to stabilize their economies and mitigate destructive market pressures.
