Nigeria to Spend 53.7% of Revenue on Debt Service in 2026, IMF Says Debt Sustainable
Updated
Updated · NigerianEye · Jun 17
Nigeria to Spend 53.7% of Revenue on Debt Service in 2026, IMF Says Debt Sustainable
3 articles · Updated · NigerianEye · Jun 17
Summary
53.7% of Nigeria’s federal revenue will go to interest payments in 2026, the IMF projected, up from 53.2% in 2025 and 40.8% in 2024.
The fund said the strain reflects weak revenue rather than excessive debt, describing Nigeria’s debt as sustainable with a moderate sovereign-stress risk and a debt-to-GDP ratio in the mid-30% range.
Christian Ebeke said interest costs above 50% of tax collections from 2025 to 2028 would squeeze spending room for health, education, cash transfers and security.
IMF forecasts also point to improving macro conditions, with average inflation easing to 16% in 2026 and gross reserves rising from $40.2 billion in 2024 to $58.1 billion in 2026.
The fund said stronger domestic revenue mobilisation—especially through implementing new tax laws—will be critical to reducing Nigeria’s fiscal vulnerabilities.
With debt consuming over half its revenue, how will Nigeria fund essential services without raising taxes?
Can Nigeria's plan to improve collection efficiency alone solve its spiraling debt service crisis?
Is Nigeria's new $5 billion derivative deal a smart financial move or an opaque debt trap?
Nigeria’s Soaring Debt Service Burden: Why Over Half of Government Revenue Goes to Repayments
Overview
Nigeria is facing a critical challenge as it spends more than half of its government revenue on debt servicing, according to IMF projections. This heavy debt burden limits the country’s ability to fund essential public services, infrastructure, and development projects, which in turn hinders economic growth and stability. The situation is made worse by the global financial system, which often labels African nations as high-risk borrowers, leading to much higher borrowing costs and restricting access to affordable, long-term finance. As a result, Nigeria’s industrial base struggles to compete, and the nation remains vulnerable to economic shocks.