Nigeria’s public external debt could rise sharply to $72.6 billion by 2027, according to new projections released by the International Monetary Fund (IMF).
The forecast appeared in the IMF’s 2026 Article IV Consultation Report on Nigeria, published on Tuesday. The report showed that external debt may increase by $20.7 billion within two years, climbing from $51.9 billion in 2025 to $72.6 billion in 2027.
Debt Burden Set to Increase
The projected increase represents a 39.9 percent jump between 2025 and 2027.
According to the IMF, rising poverty, food insecurity, and election-related spending could place additional pressure on government finances.
The Fund warned that these factors may widen fiscal deficits and push the government toward more borrowing ahead of the 2027 general elections.
“Spending pressures from elevated poverty and food insecurity, including in the run-up to elections, could widen fiscal deficits and increase financing needs,” the IMF stated.
External Debt Could Exceed $132bn
Beyond public debt, the IMF expects Nigeria’s total external debt stock to rise significantly.
The report projected that total external debt, including both public and private obligations, would increase from $109.3 billion in 2025 to $132 billion by 2027.
As a result, the country could add about $22.7 billion to its total external debt profile during the period.
Furthermore, public external debt could rise from 17.9 percent of GDP in 2025 to 18.7 percent in 2027.
The IMF also expects debt-to-export ratios to worsen. The figure may increase from 82.9 percent in 2025 to 104.3 percent by 2027.
Debt Servicing Pressure Remains High
The report highlighted growing concerns about debt servicing costs.
According to the IMF, public external debt service obligations may rise from 8.1 percent of exports in 2025 to 8.8 percent in 2027.
Similarly, interest payments on public debt could increase from $2 billion to $3 billion during the same period.
At the federal level, debt servicing may continue to consume more than half of government revenue.
The IMF estimated that interest payments absorbed 53.2 percent of federal revenue in 2025. It expects the figure to remain above 52 percent through 2027.
IMF Warns Against Risky Financing Deals
Meanwhile, the IMF raised concerns about Nigeria’s proposed $5 billion Total Return Swap (TRS) arrangement with an international lender.
The Fund described such financing structures as complex and potentially risky.
IMF Resident Representative for Nigeria, Christian Ebeke, said these deals often lack transparency and may expose governments to financial shocks.
“They carry risks, particularly if the value of underlying assets declines or exchange rates move adversely,” Ebeke explained.
He added that Nigeria currently has alternative funding options, including Eurobond issuances and concessional loans.
Therefore, he urged authorities to carefully evaluate the risks associated with the proposed transaction.
IMF Sees Moderate Risk of Sovereign Stress
Despite the projected debt increase, the IMF maintained that Nigeria’s sovereign debt remains manageable.
The Fund noted that public debt declined to 36.1 percent of GDP in 2025 from 39.3 percent in 2024.
According to the report, stronger economic growth, naira appreciation, and recent reforms contributed to the improvement.
However, the IMF warned that weak revenue generation, spending overruns, and election-related pressures could weaken the country’s fiscal position if not properly managed.
Consequently, the Fund advised the government to strengthen fiscal transparency, improve budget discipline, and continue revenue reforms.
Nigeria’s Economy Expected to Grow
The IMF also projected continued economic expansion over the next two years.
It forecast GDP growth of 4.1 percent in 2026 and 4.3 percent in 2027.
Although these figures remain positive, they fall below earlier expectations due to global uncertainties and tensions in the Middle East.
Nevertheless, the Fund said recent reforms have improved economic resilience and strengthened Nigeria’s ability to absorb external shocks.
Peter Obi Criticises Tinubu’s Borrowing Strategy
Meanwhile, former Labour Party presidential candidate, Peter Obi, criticised the administration of Bola Tinubu over rising debt levels.
Obi claimed Nigeria’s total public debt has climbed to about N200 trillion, adding that the government has borrowed excessively within three years.
He argued that the current debt profile reflects poor fiscal management and a lack of accountability.
Presidency Rejects Obi’s Claims
However, the Presidency dismissed Obi’s allegations.
Presidential aide Dada Olusegun argued that currency devaluation largely explains the increase in debt figures.
According to him, exchange rate movements significantly inflated the naira value of Nigeria’s external obligations.
He also stressed that public debt figures include obligations accumulated by state governments and should not be attributed solely to the Federal Government.
