Nigeria to allocate over 50% of revenue on debt servicing in 2026 — IMF

Nigeria is expected to allocate over 50% of its revenue for debt servicing in 2026, according to projections by the International Monetary Fund (IMF).

The IMF’s latest assessment indicates that interest payments will account for 53.7% of the government’s revenue in 2026, a rise from 53.2% in 2025 and 40.8% in 2024. The ratio is anticipated to slightly decrease to 52.4% in 2027.

Additionally, the IMF forecasts notable improvements in key economic metrics, predicting an average inflation rate of 16% in 2026. Gross international reserves are projected to grow from $40.2 billion in 2024 to $58.1 billion by 2026 and reach $62 billion in 2027.

In an appearance on ARISE Television, Christian Ebeke, the IMF Resident Representative for Nigeria, stated that the latest assessment concludes that Nigeria’s debt is sustainable and that the country faces a moderate risk of sovereign distress, not categorizing it as a high-risk debt-distressed nation.

Ebeke highlighted that Nigeria’s debt-to-GDP ratio is in the mid-30% range, favorably comparing to several peer countries. He noted the country’s debt structure benefits from a balanced combination of domestic and external borrowing with relatively long maturities.

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However, he pointed out a significant concern regarding the proportion of revenue spent on debt servicing. He estimated that between 2025 and 2028, the interest-to-revenue ratio would be around 50%.

Ebeke warned that when over 50% of tax revenue is dedicated to servicing federal government debt, there is limited capacity left for funding essential services such as health, education, social transfers, and security.

The IMF aims to assist Nigeria in enhancing domestic revenue by effectively implementing recently passed tax reforms, which he emphasized are crucial for improving government finances and mitigating fiscal risks.