IMF projects Nigeria’s foreign debt to hit $72.6bn by 2027 election year

Nigeria’s public external debt is projected to rise by $20.7 billion to $72.6 billion by 2027, the country’s next election year, according to the International Monetary Fund’s 2026 Article IV Consultation report released on Tuesday.

The Fund stated that public external debt would increase from $51.9 billion in 2025 to $66.5 billion in 2026 before climbing further to $72.6 billion in 2027, representing a 39.9 per cent rise within two years.

The IMF warned that spending pressures from rising poverty, food insecurity, and the election cycle could widen fiscal deficits and increase borrowing needs. It noted that public external debt as a share of exports of goods and services is expected to rise from 82.9 per cent in 2025 to 104.3 per cent by 2027.

Interest payments on public debt are projected to increase from $2 billion in 2025 to $3 billion by 2027, while debt servicing is expected to continue consuming over half of Federal Government revenue.

The Fund expressed reservations about a proposed $5 billion total return swap arrangement with an international bank, describing such structures as opaque and potentially risky, exposing the government to margin calls if the value of naira-denominated collateral declines.

Despite the projected debt increase, the IMF assessed Nigeria’s sovereign debt risk as moderate, noting that public debt fell to 36.1 per cent of GDP in 2025 due to stronger growth and naira appreciation. However, it urged the government to strengthen fiscal transparency and sustain revenue reforms.

The Fund projected Nigeria’s economy to grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, and recommended that monetary policy remain restrictive for longer due to renewed inflationary pressures.

In a related development, former presidential candidate Peter Obi criticised the administration for what he called excessive borrowing, while the Presidency defended the debt increase as largely due to naira devaluation.