IMF projects Nigeria’s debt-to-GDP decline to 32.3% in 2026

…Urges Nigeria to rebuild fiscal buffers amid oil windfall

Washington, D.C|| The International Monetary Fund (IMF) projects Nigeria’s debt-to-GDP ratio will decline to 32.3 percent in 2026, from 35.5 percent in 2025, before rising slightly to 33.1 percent in 2027.

The fund disclosed this in its Fiscal Monitor report released on Wednesday at the ongoing IMF/World Bank Spring Meetings in Washington, D.C., pointing to improving fiscal metrics but warning of persistent vulnerabilities.

According to the report, fiscal exposure remains particularly acute in sub-Saharan Africa and the Middle East and North Africa, where subsidy burdens surged to between two percent and four percent of GDP in some countries during the 2022 commodity price shock. It added that rising fertiliser costs could further increase food-related public spending across emerging and low-income economies.

Speaking at the Fiscal Monitor press briefing, Rodrigo Valdés, director of the IMF’s Fiscal Affairs Department, said global public debt rose to just under 94 percent of GDP in 2025 and is projected to reach 100 percent by 2029, one year earlier than previously expected.

He noted that public finances are under increasing strain from rising spending pressures on social needs, defence, and economic security, as well as higher interest costs. He added that the fiscal implications of the Middle East conflict are compounding these challenges, while structural shifts in sovereign debt markets are increasing vulnerability to sudden repricing.

“Credible, well-sequenced fiscal adjustment is urgently needed across all country groups,” Valdés said.

Other IMF officials at the briefing included Era Dabla-Norris, deputy director, Fiscal Affairs Department; Davide Furceri, division chief; and Tatiana Mossot, senior communications officer.

Responding to questions on Africa’s fiscal outlook, IMF officials said many countries on the continent remain highly vulnerable to global shocks due to elevated debt levels and limited fiscal space. They noted that rising energy, fertiliser, and shipping costs are increasing production expenses, weakening output, and exacerbating poverty, particularly in more rural economies.

They, however, drew a distinction between oil-exporting and oil-importing countries. Oil exporters such as Nigeria could benefit from higher oil prices through temporary revenue gains, but were advised to channel such windfalls into rebuilding fiscal buffers, clearing arrears, and reducing interest burdens.

In Nigeria, the IMF noted that recent subsidy reforms are helping to limit the fiscal impact of rising energy prices. However, it stressed that the country still needs to strengthen its fiscal buffers and ramp up revenue mobilisation, especially as interest payments continue to consume a significant share of government revenue.

The fund also highlighted the broader challenge of balancing short-term fiscal pressures with long-term priorities such as energy transition. While renewable energy investments require substantial upfront spending, officials noted that governments can offset some costs through measures such as carbon pricing and better management of fossil fuel externalities.

On artificial intelligence, the IMF said the technology presents opportunities to improve public sector efficiency, including tax administration and service delivery. However, it warned of risks such as job displacement, rising inequality, and increased pressure on social protection systems, urging governments to ensure their fiscal frameworks remain adaptable.

The latest projection marks a shift from the IMF’s earlier 2025 estimates, which had placed Nigeria’s debt-to-GDP ratio at 36.4 percent in 2025 and 35 percent in 2026, suggesting a faster-than-expected improvement in the country’s fiscal outlook.