Nigeria’s public external debt is projected to increase to $72.6 billion by 2027, according to the International Monetary Fund (IMF), raising concerns over the country’s debt profile ahead of the next general election cycle.
The projection was contained in the IMF’s 2026 Article IV Consultation Report on Nigeria, released on Tuesday. The Fund estimated that public external debt would rise from $51.9 billion in 2025 to $66.5 billion in 2026 before reaching $72.6 billion in 2027.
The projected increase of $20.7 billion over two years represents a 39.9 per cent rise and comes amid concerns about growing financing needs despite improvements in macroeconomic stability.
According to the IMF, spending pressures linked to rising poverty, food insecurity and election-related activities could widen fiscal deficits and increase government borrowing requirements.
“Spending pressures from elevated poverty and food insecurity, including in the run-up to the elections, could widen fiscal deficit and increase financing needs,” the report stated.
The Fund also projected that Nigeria’s total external debt stock, comprising both public and private sector obligations, would rise from $109.3 billion in 2025 to $132 billion by 2027.
Debt sustainability indicators are also expected to deteriorate. Public external debt is projected to increase from 17.9 per cent of GDP in 2025 to 18.7 per cent by 2027, while debt as a percentage of exports is expected to climb from 82.9 per cent to 104.3 per cent within the same period.
Interest payments on public debt are forecast to increase from $2 billion in 2025 to $3 billion in 2027. At the federal level, debt servicing is expected to continue consuming more than half of government revenues, with the IMF projecting interest payments at over 52 per cent of revenue through 2027.
The report noted that the Federal Government plans to rely increasingly on external financing, including a proposed $5 billion Total Return Swap (TRS) arrangement and a new Eurobond issuance, to finance budget deficits.
However, the IMF expressed concerns about the proposed TRS transaction, warning that the structure could expose Nigeria to significant financial risks.
The Fund’s Resident Representative in Nigeria, Christian Ebeke, described such financing arrangements as opaque and potentially risky, noting that they could trigger margin calls if underlying assets lose value or if the naira depreciates further.
“We think that Nigeria has market access. Nigeria can issue Eurobonds to finance the deficit, and there are other avenues for raising funds, including concessional financing,” Ebeke said during a virtual briefing.
Despite the rising debt projections, the IMF maintained that Nigeria’s debt remains sustainable, assessing the risk of sovereign debt distress as moderate. It noted that public debt declined to 36.1 per cent of GDP in 2025 from 39.3 per cent in 2024, supported by stronger economic growth, naira appreciation and broader macroeconomic improvements.
The Fund nevertheless urged authorities to strengthen fiscal discipline, improve revenue mobilisation, enhance transparency and avoid off-budget spending to contain borrowing needs and preserve debt sustainability.
IMF Mission Chief for Nigeria, Axel Schimmelpfennig, said reforms implemented over the past three years had improved economic resilience and strengthened the country’s ability to absorb external shocks.
He added that Nigeria’s economy is projected to grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, although the forecasts were revised downward due to the economic impact of the ongoing conflict in the Middle East.
Obi, Presidency Clash Over Debt Profile
Meanwhile, the presidential candidate of the Nigeria Democratic Congress (NDC), Peter Obi, criticised the Tinubu administration over what he described as excessive borrowing and weak fiscal accountability.
Obi claimed Nigeria’s total public debt had risen to about N200 trillion under President Bola Tinubu, representing an increase of more than N100 trillion within three years.
He argued that the pace of borrowing far exceeded that recorded under former President Muhammadu Buhari and questioned the transparency surrounding the utilisation of borrowed funds.
In response, the Presidency rejected Obi’s claims, insisting that much of the increase in the country’s debt profile resulted from naira devaluation rather than fresh borrowing.
Special Assistant to the President on Social Media, Dada Olusegun, said the rise in debt figures was largely a mathematical consequence of exchange rate adjustments, which increased the naira value of existing external obligations.
He also noted that Nigeria’s total public debt includes liabilities owed by state governments and should not be attributed solely to the Federal Government.
The exchange highlights growing debate over Nigeria’s debt management strategy as the country seeks to balance fiscal stability, infrastructure financing and economic growth ahead of the 2027 elections.
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