The International Monetary Fund (IMF) has projected that Nigeria will spend more than half of its revenue on debt servicing in 2026.
The projection is contained in the International Monetary
Fund’s (IMF) latest country assessment, which estimates that the federal
government’s interest payments will consume 53.7 percent of revenue in 2026, up
from 53.2 percent in 2025 and 40.8 percent in 2024.
The IMF expects the interest-to-revenue ratio to ease
marginally to 52.4 percent in 2027.
Also, IMF projected improvements in inflation and external
reserves, forecasting average inflation of 16 percent in 2026, while gross
international reserves are expected to rise from $40.2 billion in 2024 to $58.1
billion in 2026 and $62 billion in 2027.
‘NIGERIA’S DEBT IS SUSTAINABLE, BUT DEBT-SERVICE BURDEN IS A
CONCERN’
Speaking on ARISE Television on Tuesday, Christian Ebeke,
IMF resident representative for Nigeria, said the country’s debt remained
sustainable and the risk of sovereign debt distress was moderate.
“Our latest assessment in the Article IV that we just
published on June 9 basically concludes that Nigeria’s debt is sustainable. And
second, the risk of sovereign stress is actually moderate. So we don’t see
Nigeria as a high-risk debt-distressed country,” Ebeke said.
He said Nigeria’s debt-to-GDP ratio, which remains in the
mid-30 percent range, compares favourably with many peer countries, adding that
Nigeria’s debt portfolio benefits from a balanced mix of domestic and external
borrowing and relatively long maturities.
According to Ebeke, the bigger concern is the amount of
revenue being used to service debt.
“We actually estimate that in 2025 to 2028, the
interest-to-revenue ratio, how much the federal government pays out of the tax
it collects, is actually about 50 percent,” he said.
“When you have more than 50 percent of your tax collection
devoted to repaying interest on your federal government debt, it leaves you
very little room to actually pay for health, education, cash transfer,
including security.”
Ebeke said the IMF’s focus remains on helping Nigeria
strengthen domestic revenue mobilisation through effective implementation of
recently enacted tax reforms.
He said the IMF’s priority is to support efforts aimed at
strengthening Nigeria’s domestic revenue mobilisation while taking into account
prevailing economic challenges, including high inflation, widespread poverty
and food insecurity.
Ebeke added that the successful implementation and
enforcement of the country’s new tax laws would be critical to improving
government revenue and reducing fiscal vulnerabilities.
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