Nigeria’s public external debt could surge to $72.6 billion (about ₦114 trillion) by 2027, according to the International Monetary Fund (IMF), raising fresh concerns over the country’s rising debt burden ahead of the next general elections.
The IMF disclosed this in its 2026 Article IV Consultation Report released on Tuesday, projecting that Nigeria’s public external debt would rise from $51.9 billion in 2025 to $66.5 billion in 2026 before reaching $72.6 billion in 2027, representing a nearly 40 per cent increase within two years.
The Fund warned that growing poverty, food insecurity and spending pressures linked to the election cycle could widen fiscal deficits and force the government to borrow more.
Spending pressures from elevated poverty and food insecurity, including in the run-up to the elections, could widen fiscal deficits and increase financing needs,” the IMF stated.
The projection aligns with data from the Debt Management Office (DMO), which showed that Nigeria’s external debt stood at $51.86 billion as of December 31, 2025. Based on the IMF forecast, the country’s external obligations could increase by more than $20 billion by 2027.
The Fund also projected that Nigeria’s total external debt, which includes both public and private sector liabilities, would rise from $109.3 billion in 2025 to $132 billion by 2027.
According to the report, public external debt will account for 18.7 per cent of GDP in 2027, up from 17.9 per cent in 2025. Debt service obligations are also expected to increase, with interest payments projected to rise from $2 billion in 2025 to $3 billion by 2027.
At the federal level, debt servicing is expected to continue consuming more than half of government revenue. The IMF estimated that interest payments absorbed 53.2 per cent of revenue in 2025 and would remain above 52 per cent through 2027.
The Fund noted that the Federal Government plans to finance part of its 2026 budget deficit through external borrowing, including a proposed $5 billion Total Return Swap (TRS) arrangement and another Eurobond issuance.
However, the IMF expressed concerns about the swap deal, warning that such financing structures are often opaque and could expose the government to significant risks if the naira weakens further.
IMF Resident Representative in Nigeria, Christian Ebeke, said the arrangement carries risks and urged authorities to monitor it closely.
These types of structures carry risks. Usually, they are opaque, and the terms are not always very transparent,” he said during a virtual briefing.
Ebeke argued that Nigeria currently has access to alternative and more transparent funding options, including Eurobond issuances and concessional loans.
Despite concerns over the debt outlook, the IMF maintained that Nigeria’s debt remains manageable and assessed the country’s risk of sovereign stress as moderate. It noted that public debt fell to 36.1 per cent of GDP in 2025 from 39.3 per cent in 2024, supported by stronger economic growth and improved macroeconomic stability.
The Fund, however, warned that weak revenue generation, off-budget spending and election-related fiscal pressures could worsen the debt situation if not properly managed.
It advised the government to strengthen revenue mobilisation, improve budget implementation and maintain fiscal discipline to preserve debt sustainability.
Meanwhile, IMF Mission Chief for Nigeria, Axel Schimmelpfennig, said reforms implemented over the last three years had strengthened the economy and improved Nigeria’s ability to withstand external shocks.
The Fund projected that the economy would grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, although these forecasts were lower than earlier estimates due to the economic impact of the conflict in the Middle East.
Schimmelpfennig also urged the government to sustain social intervention programmes and continue reforms in infrastructure, electricity, agriculture, healthcare and education.
Reacting to the country’s rising debt profile, the 2027 presidential candidate of the Nigeria Democratic Congress, Peter Obi, accused President Bola Tinubu’s administration of excessive borrowing and poor fiscal management.
Obi claimed Nigeria’s total public debt had climbed to nearly ₦200 trillion, adding that over ₦100 trillion had been accumulated within three years.
He criticised what he described as a lack of transparency in the use of borrowed funds.
However, the Presidency dismissed Obi’s claims, insisting that much of the increase in the debt stock was due to the depreciation of the naira rather than fresh borrowing.
Special Assistant to the President on Social Media, Dada Olusegun, said the rise in debt was largely a mathematical effect of exchange rate adjustments, noting that Nigeria’s debt position in dollar terms had remained relatively stable.
The Presidency also argued that the country’s debt profile includes obligations owed by state governments and should not be attributed solely to the Federal Government.
