Onome Amuge
Nigeria has projected that its debt-to-GDP ratio could rise as high as 60 per cent by 2027 under a revised debt management framework approved by the Federal Executive Council, as the government seeks to balance financing needs with fiscal sustainability.
The projection is contained in the country’s Medium-Term Debt Management Strategy (MTDS) for 2024–2027, released by the Debt Management Office (DMO) over the weekend. Developed with technical support from the World Bank and International Monetary Fund, the framework introduces new fiscal and risk benchmarks that will guide Nigeria’s borrowing over the next three years.
According to the DMO, the strategy aims to meet the government’s financing requirements while minimising costs and risks in the debt portfolio. It also seeks to deepen the domestic debt market, enhance transparency, and reassure investors and credit rating agencies of Nigeria’s commitment to fiscal discipline.
“The key objectives of the MTDS are to meet the Government’s financing needs and payment obligations in the short to medium term, taking into consideration the costs and risks trade-offs in the debt portfolio; to achieve optimum composition of the public debt portfolio that ensures debt sustainability; and to further deepen the domestic securities market through the introduction of new products,” the DMO said.
The new framework raises Nigeria’s debt-to-GDP ceiling from 52.25 per cent as of December 2024 to 60 per cent by 2027. It also caps interest payments at 4.5 per cent of GDP, compared with 3.75 per cent previously, while limiting sovereign guarantees to five per cent of GDP, up from 2.09 per cent.
In addition, the strategy shifts the domestic-to-external debt mix to 55:45, from the current 48:52, to reduce foreign exchange exposure. It also seeks to lengthen the maturity profile of debt, ensuring that no more than 15 per cent of obligations fall due within a year and maintaining an average time to maturity of at least 10 years.
The DMO said the strategy was developed in consultation with the Central Bank of Nigeria, the Ministry of Finance, and other key stakeholders. The involvement of the World Bank and IMF, it added, ensured that the plan aligns with international best practice.
The announcement comes against the backdrop of a recalibration of Nigeria’s debt profile following the rebasing of gross domestic product earlier this year. The National Bureau of Statistics expanded GDP coverage to include sectors such as digital services, fintech, creative industries, and the informal economy, lifting nominal GDP to N379.17 trillion at the end of the first quarter of 2025.
The rebasing pushed down Nigeria’s debt-to-GDP ratio to 39.4 per cent in March 2025, from 52.1 per cent in December 2024, without altering the underlying debt stock. Total public debt stood at N149.39 trillion at the end of the first quarter, comprising N78.76 trillion in domestic obligations and N70.63 trillion in external borrowings.
Analysts have warned that while the rebasing improves statistical ratios, it does not reduce the government’s repayment obligations or the rising cost of debt servicing. Data from the DMO show that total debt rose by N27.72 trillion, or 22.8 per cent year-on-year, between March 2024 and March 2025, reflecting both fresh borrowings and the depreciation of the naira, which inflated the cost of servicing external liabilities.
The IMF has repeatedly urged the government to increase non-oil revenue mobilisation to create fiscal space, while warning against excessive reliance on short-term or foreign currency borrowings.
The government has defended its borrowing plans, arguing that the expanded fiscal headroom is necessary to finance infrastructure and stimulate growth. The new MTDS, officials say, will provide a structured framework for achieving this while maintaining investor confidence.
