IMF warns Nigeria of fiscal pressure, says external debt will rise to $20.7bn before 2027 polls

The International Monetary Fund has warned that Nigeria faces rising fiscal pressure, projecting that the country’s external debt will increase by about $20.7 billion before the 2027 general elections.

In its 2026 Article IV Consultation Report on Nigeria, the IMF said public external debt is expected to rise from $51.9 billion in 2025 to $66.5 billion in 2026 and further to $72.6 billion in 2027, marking a 39.9 per cent increase within two years.

The Fund cautioned that spending pressures linked to rising poverty, food insecurity, and political activities ahead of the 2027 polls could widen Nigeria’s fiscal deficit and increase borrowing needs.

It added that total external debt, including both public and private sector obligations, is projected to climb from $109.3 billion in 2025 to $132 billion by 2027.

The IMF also raised concerns about debt servicing, noting that interest payments will continue to consume over half of Federal Government revenue during the period under review.

While acknowledging recent macroeconomic reforms that have strengthened stability and improved resilience, the Fund maintained that risks remain elevated, especially with increasing reliance on external borrowing and proposed financing arrangements such as the $5 billion Total Return Swap deal currently under consideration.

The IMF described such arrangements as potentially opaque and warned that they could expose Nigeria to financial risks if exchange rate conditions worsen.

Despite the concerns, the Fund assessed Nigeria’s debt risk as moderate and projected economic growth of 4.1 per cent in 2026 and 4.3 per cent in 2027, but urged the government to strengthen fiscal discipline, improve transparency, and avoid off-budget spending ahead of the election cycle.

Reacting to the projections, former presidential candidate Peter Obi criticised the administration over what he described as reckless borrowing, alleging that Nigeria’s total debt has surged to about N200 trillion under the current government.

However, the Presidency dismissed the claims, arguing that the rise in debt figures is largely driven by naira devaluation and not necessarily new borrowing, insisting that dollar-denominated debt levels remain relatively stable.

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