The Debt Management Office (DMO) has projected that Nigeria’s debt-to-Gross Domestic Product (GDP) ratio could surge to 60% by 2027 based on the recently approved a new debt management framework by the Federal Executive Council.
The Office made the projection in a press release issued at the weekend in Nigeria’s Medium-Term Debt Management Strategy (MTDS) for 2024–2027, developed with technical support from the World Bank and the International Monetary Fund (IMF).
According to the DMO, the framework is designed in line with global best practices and to strike a balance between the government’s financing needs and debt sustainability, while reducing costs and risks associated with borrowing.
The Office clarified: “The key objectives of the MTDS are to meet the Government’s financing needs and payment obligations in the short to medium term, taking into consideration the costs and risks trade-offs in the debt portfolio; to achieve optimum composition of the public debt portfolio that ensures debt sustainability; and to further deepen the domestic securities market through the introduction of new products,”
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Specifically, the strategy sets specified some key benchmarks across fiscal and risk indicators that will guide the Nigerian government’s debt management decisions between 2024 and 2027, putting a ceiling on Nigeria’s debt-to-GDP ratio from 52.25% as of December 2024 to 60% by 2027.
In addition, the DMO also capped interest payments at a maximum of 4.5 per cent of GDP, compared to 3.75 per cent in 2024, while sovereign guarantees are not to exceed five per cent of GDP, up from 2.09 per cent previously.
Other targets of the Medium-Term Debt Management Strategy (MTDS) for 2024–2027 include shifting the domestic-to-external debt mix from 48:52 to a more favourable 55:45 to reduce foreign exchange exposure, ensuring that no more than 15% of total debt matures within a year, and maintaining an average time to maturity of at least 10 years.
The DMO explained that the formulation of the MTDS involved wide consultations with stakeholders in the monetary and fiscal space, including the Central Bank of Nigeria and the Ministry of Finance, with technical inputs from the World Bank and IMF to ensure alignment with international standards.
The agency added that the plan would reassure investors, credit rating agencies, and international partners of Nigeria’s commitment to responsible debt management and fiscal discipline.
The new framework is coming on the heels of the recent adjustment of Nigeria’s debt profile sequel to the rebasing of the nation’s GDP by the National Bureau of Statistics (NBS) in July this year, which broadened the scope of economic activities to hitherto uncovered sectors, including the digital economy, fintech, creative industries and the informal sector, and boosted Nigeria’s nominal GDP to N379.17 trillion for the year ending Q1 2025.
Following the rebasing exercise, Nigeria’s debt-to-GDP ratio dropped to 39.4% as of March 31, 2025, from 52.13% recorded as of December 2024.
This is even as data from the DMO showed that as of the first quarter of 2025, Nigeria’s total public debt surged to N149.39 trillion, comprising N78.76 trillion and N70.63 trillion domestic and external respectively.
