IMF Urges Nigeria to Review Rising Debt Profile

The International Monetary Fund (IMF) has urged Nigeria to undertake a comprehensive review of its debt profile to avert potential economic instability, stressing the need for a balanced and strategic borrowing approach. Speaking at a press briefing during the IMF Spring Meetings is Washington, D.C., the Director of the African Department, Abere Aemro Selassie, emphasised that borrowing decisions must be assessed holistically. "These kinds of issues, whether to borrow externally or domestically, have to be seen in totality for possible optimisation," he said.

He added that the priority should be maintaining debt at sustainable levels. "What is really important is to see the level of debt as manageable as possible, whether in terms of servicing or capacity. Second is to do liability management operations that would help you to extend maturities," Selassie stated.

Nigeria’s total public debt rose to N159.28 trillion as of December 31, 2025, according to data released by the Debt Management Office (DMO). This represents an increase from N153.29 trillion recorded at the end of September 2025, indicating a quarter-on-quarter rise of N5.98 trillion or 3.9 per cent.

On a year-on-year basis, public debt increased by N14.61 trillion, rising from N144.67 trillion in December 2024. In dollar terms, the debt climbed from $94.23 billion to $110.97 billion, reflecting a $16.75 billion increase.

Domestic debt continued to account for the largest share, rising to N84.85 trillion in December 2025 from N81.82 trillion in September 2025. This represents a quarterly increase of N3.03 trillion, with domestic borrowing underscoring Nigeria’s sustained reliance on the local market for financing.

The Federal Government held the bulk of domestic debt at N80.49 trillion, representing over half of the total public debt, while states and the Federal Capital Territory accounted for N4.36 trillion.

External debt also rose to N74.43 trillion in December 2025, up from N71.48 trillion in September 2025 and N70.29 trillion a year earlier. In dollar terms, external debt increased to $51.86 billion from $48.46 billion in the previous quarter.

Despite the increase, the DMO maintained that the structure of Nigeria’s debt portfolio remained relatively stable, with domestic debt accounting for 53.27 per cent and external debt 46.73 per cent of total debt.

The IMF also warned that Nigerians could face tougher economic conditions in the near term due to rising food and transportation costs driven by global shocks and geopolitical tensions.

Selassie highlighted the immediate impact of these pressures on households, noting: “The immediate effect will be quite a bit of pressure, including on food security… transportation costs have gone up, it’s going to raise the cost of food and so quite a bit of dislocation.”

He added: “We’re already seeing quite a lot of increase in transportation prices that people are facing already. Transportation costs are very high for people in urban areas, rural areas even more so.”

Highlighting the strain on living conditions, he said: “We are already seeing quite a bit of a pinch from the crisis on people. It is making life difficult for people.”

On policy response, Selassie urged governments to stay the course on reforms despite limited fiscal space. “What we are pleading is that these interventions are consistent with the medium-term objectives that countries have, and that they’re not thrown off course by this because that would be a double whammy for countries,” he said.

Meanwhile, the IMF projected that Nigeria’s debt-to-GDP ratio will rise to 33.1 per cent by 2027, underscoring mounting fiscal pressures even as higher oil prices present a potential revenue boost for the country.