Nigeria’s public external debt is projected to increase significantly over the next two years, reaching $72.6 billion by 2027, according to the International Monetary Fund (IMF). The forecast, contained in the IMF’s 2026 Article IV Consultation Report released on Tuesday, indicates that public external debt will rise from an estimated $51.9 billion in 2025 to $66.5 billion in 2026 before climbing to $72.6 billion in 2027. This represents an increase of approximately $20.7 billion, or nearly 40 per cent, within the period.
The IMF attributed the anticipated rise in borrowing to mounting fiscal pressures, particularly those linked to widespread poverty, food insecurity and increased spending demands ahead of the next general elections.
“Spending pressures from elevated poverty and food insecurity, including in the run-up to the elections, could widen the fiscal deficit and increase financing needs,” the IMF stated.
The Fund also projected that Nigeria’s total external debt stock, encompassing both public and private sector liabilities, would increase from $109.3 billion in 2025 to $132 billion by 2027.
In addition, key debt sustainability indicators are expected to weaken. Public external debt as a percentage of Gross Domestic Product (GDP) is forecast to rise from 17.9 per cent in 2025 to 18.7 per cent in 2027. Similarly, the debt-to-exports ratio is projected to increase from 82.9 per cent to 104.3 per cent during the same period.
Debt servicing obligations are also expected to grow, with interest payments on public debt rising from $2 billion in 2025 to $3 billion by 2027. At the federal level, the IMF projects that debt servicing will continue to consume more than half of government revenues, with the ratio remaining above 52 per cent through 2027.
To bridge financing gaps, the Federal Government is expected to seek additional funding through external sources, including a proposed $5 billion Total Return Swap (TRS) facility and a new Eurobond issuance.
However, the IMF expressed concerns over the proposed TRS arrangement, cautioning that it could expose Nigeria to significant financial vulnerabilities.
Speaking during a virtual briefing, IMF Resident Representative in Nigeria, Christian Ebeke, described such financing structures as lacking transparency and susceptible to market volatility.
“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.
Despite the anticipated increase in borrowing, the Fund maintained that Nigeria’s debt remains sustainable and assessed the country’s risk of sovereign debt distress as moderate.
According to the report, public debt declined to 36.1 per cent of GDP in 2025 from 39.3 per cent in the previous year, driven by stronger economic performance, appreciation of the naira and broader macroeconomic improvements.
The IMF urged Nigerian authorities to deepen fiscal reforms by expanding revenue generation, strengthening transparency, enforcing expenditure controls and curbing off-budget spending.
IMF Mission Chief for Nigeria, Axel Schimmelpfennig, noted that recent economic reforms had improved the country’s resilience and enhanced its ability to absorb external shocks.
He added that Nigeria’s economy is expected to grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, although those projections have been revised downward due to the economic implications of the ongoing conflict in the Middle East.
The IMF report emerged amid renewed political debate over the nation’s rising debt profile.
Presidential candidate of the Nigeria Democratic Congress (NDC), Peter Obi, recently accused the administration of President Bola Tinubu of excessive borrowing and insufficient fiscal accountability.
Obi alleged that Nigeria’s total public debt had climbed to approximately N200 trillion under the current administration, representing an increase of more than N100 trillion within three years. He also questioned how borrowed funds had been utilised and argued that the current pace of borrowing exceeded that recorded during the administration of former President Muhammadu Buhari.
The Presidency, however, rejected the allegations, arguing that exchange rate adjustments were largely responsible for the increase in debt figures.
Special Assistant to the President on Social Media, Dada Olusegun, stated that much of the increase reflected the naira valuation of existing foreign debt following currency devaluation rather than a corresponding rise in new borrowing.
He further maintained that Nigeria’s total public debt includes liabilities incurred by state governments and should not be attributed solely to the Federal Government.
