IMF Forecasts Nigeria’s Debt-to-GDP Ratio to Drop to 35% by 2026 Amid Fiscal Reforms and Revenue Growth
Nigeria’s debt outlook is brightening as the International Monetary Fund (IMF) projects a steady decline in the nation’s debt-to-GDP ratio over the next two years. According to the IMF’s latest Fiscal Monitor Report, released during the ongoing Annual Meetings of the IMF and World Bank in Washington D.C., Nigeria’s general government gross debt is expected to fall from 39.3 percent in 2024 to 36.4 percent in 2025, and further to 35 percent in 2026. The figures include the Central Bank of Nigeria’s overdrafts and the liabilities of the Asset Management Corporation of Nigeria (AMCON). This downward trend signals an improvement in fiscal discipline, economic management, and reduced reliance on borrowing.
The IMF attributed this positive outlook to Nigeria’s ongoing fiscal consolidation measures, improved revenue mobilization, and the gradual rebound in economic growth. A lower debt-to-GDP ratio implies that the government’s debt burden is becoming more manageable relative to the size of the economy. This development, the Fund noted, reflects progress in public financial management and a stronger commitment to prudent spending. “Nigeria’s fiscal stance remains consistent with efforts to curb inflation while supporting sustainable growth,” said Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department, during a press conference in Washington.
Gaspar commended Nigeria’s recent strides in tax reforms, noting that the country has made progress in streamlining its tax administration to improve efficiency and fairness. He explained that the reforms have reduced tax expenditures, created a more equitable system, and limited the burden on low-income earners and businesses. However, he emphasized that there is still significant room to expand the tax base, enhance collection efficiency, and channel more resources toward social protection and infrastructure. “The policies being implemented in Nigeria are consistent with a structural fiscal framework that strengthens both the revenue and expenditure sides of government operations,” Gaspar added.
The IMF’s report also placed Nigeria’s progress within a broader global context. It warned that global public debt is expected to exceed 100 percent of global GDP, the highest level since 1948, amid mounting borrowing costs, climate-related spending, and geopolitical pressures. Gaspar noted that while advanced economies such as the United States, Japan, and France can manage higher debt levels due to deep financial markets, emerging markets and developing nations face tighter constraints. The report identified 55 countries currently at high or distressed fiscal risk, underscoring the growing importance of restoring fiscal buffers.
In closing, the IMF urged governments, including Nigeria’s, to maintain fiscal discipline and focus spending on growth-friendly priorities such as education, infrastructure, and innovation. By enhancing transparency, governance, and accountability, Gaspar said, countries can strengthen investor confidence and support inclusive development. The IMF reaffirmed its commitment to assist Nigeria and other member nations in implementing structural reforms that promote long-term stability, resilience, and trust in public institutions.
source: Business day