The International Monetary Fund (IMF) says Nigeria’s debt-to-gross domestic product (GDP) ratio will increase to 33.1 percent in 2027, a period when Nigerians will head to the polls.
On April 15, the Debt Management Office (DMO) said Nigeria’s total public debt for federal and state governments hit N159.27 trillion at the end of the fourth quarter (Q4) of 2025.
The figure increased by N5.98 trillion from the N153.29 trillion recorded at the end of the third quarter (Q3) and N14.6 trillion higher than the N144.67 trillion booked in Q4 of 2024.
President Bola Tinubu had asked the national assembly to approve external loans totalling $6 billion.
‘GLOBAL FISCAL OUTLOOK DETERIORATING’
In the report, the IMF warned of a deteriorating fiscal outlook, despite the global economy showing resilience.
The fund said global gross government debt rose to nearly 94 percent of GDP in 2025, noting that on current trajectories, it will reach 100 percent by 2029, “a level previously reached only in the aftermath of World War II”.
“Global debt-at-risk three years ahead now stands near 117 percent of GDP, with a gap of roughly 20 percentage points between the median projection and the right tail, underscoring heightened downside risks. Several reinforcing forces could weigh on the fiscal outlook,” the IMF said.
According to the report, the conflict in the Middle East could further strain government finances through higher food and fuel prices, tighter financial conditions, lower activity, and rising defence outlays.
If the conflict is prolonged, the organisation said global debt-at-risk could increase by an additional 4 percentage points.
“Separately, a correction in artificial intelligence–related asset valuations, in which US stocks fall by 20 percent with spillovers to global financial conditions, could raise global debt-at-risk by a further 2.4 percentage points,” the report stated.
‘REBUILD FISCAL BUFFERS, STEER CLEAR OF ENERGY SUBSIDIES
Speaking to journalists on the findings of the report, Rodrigo Valdés, IMF’s director of fiscal affairs, said governments’ responses should protect the most vulnerable when preserving the price signals to help economies adjust.
He advised countries to rebuild fiscal buffers without delay once conditions stabilise.
“Crisis, of course, require emergency support and people focus on the crisis, but the ability to respond really depends on pre-existing fiscal space, and too often, the needed consolidation is postponed,” Valdes said.
“That only ratchets up squeezing the fiscal space for the next crisis.”
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The director said countries need tangible progress, anchoring credible medium-term fiscal frameworks and clear communication, warning that delay could lead to steeper efforts in the future, and increase the possibility of not having an orderly fiscal consolidation.
“In low-income developing economies, a priority is to strengthen domestic revenue mobilisation to protect social and development spending, and also because we have to recognise that external aid is the gap with that,” he said.
However, Valdes said with debt already high in many places, a fiscal response must not put public finances at risk.
The director said fiscal policy should steer clear of discretionary demand stimulus, “unless things change in a big way”.
“It would make just harder the central bank job in terms of inflation control,” Valdes said.
The IMF executive warned that broad-based energy subsidies or excise reductions are not the best tool, as they “distort price signals, are fiscally costly, regressive, and hard to unwind.”
The Cable
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