Nigeria’s public external debt is expected to climb to $72.6 billion by 2027, according to projections contained in the International Monetary Fund (IMF) 2026 Article IV Consultation Report released on Tuesday.
The report estimates that the country’s external public debt will increase from $51.9 billion in 2025 to $66.5 billion in 2026 before rising further to $72.6 billion in 2027, representing an increase of nearly 40 percent within two years.
The IMF noted that the projected rise coincides with Nigeria’s next presidential election year and warned that growing poverty, food insecurity, and election-related spending could place additional pressure on government finances.
According to the Fund, increased expenditure during the pre-election period may widen the fiscal deficit and compel the government to seek additional financing.
Data contained in the report also indicate that Nigeria’s total external debt, covering both public and private sector obligations, is projected to rise from $109.3 billion in 2025 to $119.3 billion in 2026, before reaching $132 billion in 2027. This would amount to a $22.7 billion increase over the two-year period.
The IMF stated that public external debt would account for a larger share of the economy, rising from 17.9 percent of GDP in 2025 to 18.7 percent by 2027. Relative to exports of goods and services, the debt ratio is expected to grow from 82.9 percent to 104.3 percent during the same period.
The report further projected that debt servicing obligations would remain significant. Public external debt service is expected to represent 8.8 percent of exports in 2027, while interest payments on public debt are forecast to increase from $2 billion in 2025 to $3 billion by 2027.
At the federal level, interest payments are expected to continue consuming more than half of government revenue, with the IMF estimating the ratio at 53.7 percent in 2026 before easing slightly to 52.4 percent in 2027.
The Fund also highlighted the government’s increasing reliance on external borrowing to finance budget deficits. It pointed to plans for a proposed $5 billion Total Return Swap (TRS) arrangement with an international bank alongside another Eurobond issuance.
However, the IMF expressed concern over the proposed TRS financing structure, describing such arrangements as relatively opaque and warning that they could expose the government to financial risks, including margin calls if the value of naira-backed collateral declines because of currency depreciation or rising interest rates.
During a virtual briefing on the report, IMF Resident Representative for Nigeria, Christian Ebeke, said Nigeria already has access to international capital markets and could instead raise funds through Eurobond issuances or concessional financing arrangements, which may be more transparent.
While acknowledging improvements in Nigeria’s macroeconomic environment following recent reforms, the IMF maintained that weak revenue generation, fiscal slippages, contingent liabilities, and election-related spending could worsen the country’s debt outlook if not effectively managed.
Nevertheless, the Fund assessed Nigeria’s sovereign debt risk as moderate, noting that total public debt declined to 36.1 percent of GDP in 2025, compared with 39.3 percent in 2024, largely due to stronger economic growth, naira appreciation, and improved macroeconomic stability.
The IMF advised the government to strengthen fiscal transparency, sustain revenue mobilisation reforms, improve budget implementation, and avoid off-budget spending in order to limit borrowing needs and maintain debt sustainability.
IMF Mission Chief for Nigeria, Axel Schimmelpfennig, said reforms implemented over the past three years have strengthened the economy’s resilience and helped cushion external shocks, including the effects of the ongoing conflict in the Middle East.
He added that while higher global oil prices could boost Nigeria’s export earnings and government revenue, they could also intensify inflation through increased costs of fuel, food, and fertilisers.
The IMF projected Nigeria’s economy to expand by 4.1 percent in 2026 and 4.3 percent in 2027, although these forecasts are lower than previous estimates because of global economic uncertainties linked to the Middle East conflict.
The Fund also recommended that monetary policy remain restrictive for longer to address inflationary pressures and urged the government to expand cash transfer programmes while continuing reforms in infrastructure, electricity, agriculture, security, education, and healthcare.
In a related development, Peter Obi, the 2027 presidential candidate of the Nigeria Democratic Congress (NDC), criticised the administration of President Bola Tinubu, alleging that Nigeria’s public debt has risen to about ₦200 trillion due to excessive borrowing and poor fiscal accountability.
Obi argued that more than ₦100 trillion had been added to the nation’s debt within three years, describing the trend as unsustainable and lacking transparency in the utilisation of borrowed funds.
Responding to the criticism, the Presidency rejected Obi’s claims, insisting that the sharp increase in the debt profile is largely the result of the naira’s devaluation, which inflated the local currency value of external debt rather than reflecting massive new borrowing.
Special Assistant to the President on Social Media, Dada Olusegun, also noted that Nigeria’s public debt figures include obligations accumulated by state governments and should not be attributed solely to the Federal Government.
