IMF Forecasts Nigeria’s Debt-to-GDP Ratio to Drop to 35% by 2026 Amid Fiscal Reforms

The International Monetary Fund (IMF) has projected Nigeria's debt-to-GDP ratio to decline sharply, with its projection standing at 36.4% in 2025 and further declining to 35% in 2026. The projection is based on optimism regarding the fiscal course of Nigeria, which is driven by ongoing reforms and public finances stabilization efforts.

IMF World Economic Outlook notes that Nigeria's 40.2% debt burden in 2023 is expected to trend downward due to improved revenue mobilization and augmented fiscal restraint. The government's initiative to increase the tax base and reduce reliance on borrowing is considered a key catalyst of this trend.

Despite the uncertainties in the international economy, the Nigerian fiscal authorities committed to reducing budget deficits and enhancing transparency of public spending. The IMF also emphasized the importance of maintaining macroeconomic stability and structural reforms to pursue the positive pace.

The reduced forecast is important given Nigeria's recent debt accumulation, which precipitated concerns of non-sustainability and market sentiment. The IMF projection suggests that with current policies in place, Nigeria might be able to reverse towards a better balanced fiscal performance in the next two years.

The improvement would strengthen Nigeria's credit worthiness and the foreign investment flows it can capture, subject to being complemented by sustained policies to improve governance as well as curb inflationary pressures.