The International Monetary Fund (IMF) has projected that Nigeria will spend more than half of its government revenue on debt servicing in 2026. According to its latest country assessment, interest payments will account for 53.7% of revenue in 2026, rising from 53.2% in 2025 and 40.8% in 2024, before easing slightly to 52.4% in 2027.
Despite the debt burden, the IMF forecast improvements in key macroeconomic indicators. It projected that inflation will average 16% in 2026, while gross international reserves are expected to rise from $40.2 billion in 2024 to $58.1 billion in 2026 and further to $62 billion in 2027.
Speaking on ARISE Television, IMF Resident Representative for Nigeria, Christian Ebeke, said Nigeria’s debt remains sustainable, adding that the risk of sovereign stress is considered moderate rather than high.
He noted that Nigeria’s debt-to-GDP ratio remains in the mid-30% range, which compares favourably with several peer countries. He also explained that the country’s debt structure is supported by a mix of domestic and external borrowing with relatively long repayment maturities.
However, Ebeke warned that the major concern is the proportion of revenue used for debt servicing. He estimated that between 2025 and 2028, about 50% of government revenue would go into interest payments, limiting funds available for essential services.
He added that when over half of tax revenue is used to service debt, it constrains government spending on critical sectors such as health, education, social support, and security. The IMF representative said the Fund is encouraging Nigeria to strengthen domestic revenue generation through the effective implementation of recent tax reforms to improve fiscal stability.
Elijah Adeyemi
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