Nigeria’s debt burden is expected to ease over the next two years as the International Monetary Fund (IMF) projects a steady decline in the country’s debt-to-GDP ratio, according to its latest Fiscal Monitor Report released at the ongoing Annual Meetings of the IMF and World Bank in Washington D.C. reported by BusinessDay.
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Debt-to-GDP on a downward path
The IMF estimates that Nigeria’s general government gross debt will fall from 39.3 per cent in 2024 to 36.4 per cent in 2025, and further to 35 per cent in 2026. The figures include overdrafts from the Central Bank of Nigeria and liabilities of the Asset Management Corporation of Nigeria (AMCON).
The Fund said the outlook reflects fiscal consolidation, improved revenue mobilisation, and gradual economic recovery. A lower debt-to-GDP ratio indicates a reduction in the debt burden relative to the size of the economy, signalling progress in public financial management and a declining reliance on borrowing.
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IMF commends fiscal efforts
Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department, stated that Nigeria’s fiscal stance aligns with efforts to manage inflation and promote sustainable growth. He noted that ongoing tax reforms have helped reduce tax expenditures and promote a fairer system.
“The policies being implemented in Nigeria are consistent with a structural fiscal framework that strengthens both the revenue and expenditure sides of government operations,” Gaspar said. He added that there is “still room to improve tax administration and spending efficiency, while also expanding social programmes to protect vulnerable groups.”
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Global debt concerns persist
The IMF warned that global public debt is projected to exceed 100 per cent of global GDP—the highest level since 1948—with risks of rising further under adverse conditions. Gaspar highlighted that while major economies have high debt levels, emerging markets face greater risks due to limited fiscal space and higher borrowing costs.
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He emphasised the need for countries to rebuild their fiscal buffers and enhance public institutions. “Countries must act now to strengthen fiscal discipline, build resilience, and enhance growth prospects through effective public spending and institutional reforms,” he said.
The IMF reaffirmed its commitment to supporting Nigeria and other member countries in implementing policies that promote growth, stability, and public trust.
