Nigeria’s rising debt load is tightening the country’s fiscal breathing space, with the Nigerian Economic Summit Group warning that persistent risks are mounting even as the debt level remains below certain international benchmarks. In its latest economic review, the NESG said the public debt-to-GDP ratio has risen to 40.6%, underscoring how higher borrowing costs are becoming a growing threat to macroeconomic stability.
Debt concerns and the drivers behind them
- The NESG said the debt sustainability outlook remains “elevated,” pointing to weak revenue performance alongside growing obligations tied to debt servicing.
- It cautioned that Nigeria’s increasing reliance on borrowing, in a context of soft revenue generation, could further strain public finances if reforms are not rolled out urgently.
- The group warned that, while Nigeria’s overall debt stock is still under some external reference levels, the rising cost of servicing that debt is what is increasingly endangering economic stability.
The NESG said fiscal authorities should respond by putting revenue growth at the top of the agenda and maintaining discipline in spending. It urged the Federal Government to intensify measures aimed at expanding non-oil income, upgrading tax administration, and creating conditions that encourage private sector investment—steps the group said are necessary to limit dependence on additional borrowing.
Beyond debt dynamics, the NESG highlighted other macroeconomic pressures that could compound the challenge. It pointed to ongoing inflation, volatility in the exchange rate, and sluggish productivity growth as factors that—if not managed effectively—could worsen Nigeria’s economic outlook.
Looking ahead, the group stressed that sustained execution of fiscal and monetary policies will be key to rebuilding investor confidence and laying the groundwork for long-term economic growth.
