Nigeria’s Debt-to-GDP Projected to Fall to 39.8% in 2025 Amid Strong Growth and Naira Stability
For the first time in more than a decade, Nigeria’s debt burden is expected to ease significantly as the country’s debt-to-GDP ratio is projected to fall to 39.8% in 2025, down from 49.2% in 2024, according to the latest World Bank Nigeria Development Update report titled “From Policy to People: Bringing the Reform Gains Home.” The decline marks a milestone in Nigeria’s fiscal management, signaling the first measurable improvement since 2014.
The World Bank attributes this positive outlook to stronger economic growth, improved fiscal resilience, and a more stable exchange rate, which have collectively reduced the pressure on public finances. The lender also highlighted a notable drop in Nigeria’s debt service-to-revenue ratio, describing it as a return to levels not seen in years — a key indicator of better debt sustainability.
Nigeria’s total public debt climbed sharply to ₦149.39 trillion in the first quarter of 2025, up by ₦27.72 trillion from the previous year. The increase was largely fueled by past currency volatility that inflated the country’s external debt in naira terms. However, the local currency’s improved stability and recent fiscal reforms have started to reverse the upward debt trend, setting the stage for a healthier macroeconomic balance.
Economic growth has also played a critical role in this turnaround. Nigeria’s GDP growth rate surged to 4.23% in Q2 2025, the highest in five years, buoyed by rising oil output, improved non-oil performance, and increased private sector investment. These developments, according to analysts, have boosted government revenues and reduced the need for excessive borrowing.
If the trend continues, Nigeria could enter 2026 with a stronger fiscal position, easing investor concerns and supporting its push for a more sustainable economy. The combination of growth, currency stability, and disciplined spending could mark a new era for Africa’s largest economy, one where fiscal policy begins to match the pace of economic ambition.
source: Business day