IMF, Analysts Warn Nigeria Over Rising Debt Burden

Abuja, Nigeria — The International Monetary Fund (IMF) and financial analysts have raised alarms over Nigeria’s mounting public debt levels as the federal government advances plans to secure nearly $26 billion in new loans to support its 2025–2026 fiscal agenda.

The warning follows President Bola Tinubu’s recent $21.5 billion loan request to the National Assembly — a move intended to address funding gaps and spur economic growth. The borrowing strategy also includes plans to raise €2.2 billion ($2.5 billion), 15 billion yen ($104 million), and $2 billion through domestic channels.

Analysts at Cowry Asset Management, in a briefing note, cautioned that the new borrowing proposals mark a significant shift from the administration’s earlier pledge to reduce reliance on debt by prioritizing foreign direct investment and equity financing. They observed that roughly 60% of the proposed 2025 national budget would be financed by new debt, a trend they described as worrisome amid limited revenue growth.

While the loans are earmarked for sectors such as infrastructure, health, education, and agriculture, Cowry analysts argue that much of the funding may end up supporting recurrent and short-term capital expenditures — rather than fostering sustainable economic transformation.

According to data from the Debt Management Office (DMO), Nigeria’s total public debt stood at $94.23 billion (₦144.67 trillion) as of December 2024. Although this represents a decline from $108.23 billion the previous year, analysts note that the reduction stemmed from naira devaluation rather than actual debt repayment.

Debt servicing remained high in 2024, with Nigeria spending $4.66 billion, including $2.8 billion in principal and $1.74 billion in interest. Multilateral institutions accounted for the largest repayments at $2.62 billion, followed by commercial lenders ($1.47 billion) and bilateral creditors ($570.67 million).

Despite these pressures, the Tinubu government has already secured $7.2 billion in external loans since May 2023 — all from the World Bank. These include $2.25 billion for economic stabilization, $800 million for social intervention, and $750 million for the power sector. Additional inflows of $1.57 billion and $632 million are expected between September 2024 and March 2025.

The IMF, in its latest Fiscal Monitor publication, underscored the global nature of the debt challenge, warning that debt accumulation is rising rapidly in economies representing 80% of global GDP. If left unaddressed, global public debt could reach 100% of GDP by 2030, the Fund warned.

“Countries need to implement credible medium-term fiscal strategies to reduce debt and rebuild resilience,” the IMF stated, calling for smarter taxation, prudent spending, and trust-building reforms to stabilize economies.

Cowry Research further noted Nigeria’s vulnerability to external shocks, especially given the continued slide in global oil prices below $75 per barrel, a key revenue benchmark. They stressed the need for stronger oversight, efficient use of public funds, and a pivot toward investment-driven growth policies over recurrent borrowing.

By Taiwo Olatinwo | June 2, 2025