Nigeria’s debt risks persist despite signs of fiscal stabilisation
Nigeria may be showing early signs of fiscal recovery, but the country remains firmly within a high-risk debt zone as structural weaknesses continue to threaten long-term economic stability, according to a new assessment by the Nigerian Economic Summit Group (NESG).
In its latest Debt Burden Index report, the policy think tank warned that improvements in headline debt indicators conceal deeper vulnerabilities tied to weak government revenues, elevated borrowing requirements and mounting debt-servicing obligations.
The group noted that Nigeria’s Debt Burden Index declined to 70.9 points in 2024 from 83.6 points a year earlier, suggesting a moderation in fiscal stress. Yet analysts cautioned that the improvement reflects temporary easing in financing pressures rather than a fundamental shift towards sustainable public finances.
Nigeria’s debt-to-GDP ratio climbed to 40.6 per cent in 2024 as the federal government continued to rely heavily on borrowing to plug widening fiscal gaps. The NESG projected that debt pressures would remain elevated throughout 2025, with the country’s fiscal outlook still vulnerable to exchange-rate instability, inflationary pressures and weak tax mobilisation.
The report further warned that rising debt servicing costs are increasingly crowding out critical investments in infrastructure, healthcare and social development.
Nigeria’s total public debt reportedly rose to ₦159.28tn equivalent to approximately $117.3bn at an exchange rate of about ₦1,357/$ by the end of 2025, while annual debt servicing costs reached nearly ₦16tn, or roughly $11.8bn.
The warning comes as broader concerns continue to mount over the resilience of Africa’s largest economy. Nigeria’s banking sector has also faced growing strain, with the country’s five biggest lenders collectively recording ₦2.36tn (about $1.74bn) in impairment charges in 2025 amid rising non-performing loans.
Despite reforms introduced by the administration of President Bola Tinubu, including fuel subsidy removal and foreign exchange liberalisation, economists say Nigeria’s fiscal position remains fragile due to persistent revenue underperformance and external financing pressures.
The NESG said meaningful progress towards debt sustainability would require stronger domestic revenue mobilisation, disciplined public spending and accelerated structural reforms capable of stimulating productive economic growth.
