By Felix Olukayode
Nigeria’s debt burden is threatening to squeeze spending on healthcare, education, infrastructure and other essential services, as interest payments are projected to consume 53.7 per cent of federal government revenue in 2026, up from 40.8 per cent in 2024. The International Monetary Fund (IMF), in its June 2026 assessment, warned that the growing burden leaves the government with less money to meet Nigerians’ needs.
Nigeria has been here before. According to reports by the Debt Management Office (DMO, in 2005, the Paris Club cancelled about $18 billion, or 60 per cent, of the roughly $30 billion Nigeria owed its creditors. But the country had to pay $12.4 billion to secure the relief and exit the debt arrangement. The deal offered breathing space, but it did not eliminate the need for responsible borrowing and sound public finance management.
The IMF itself lent Nigeria $3.4 billion in April 2020 through its emergency financing facility to cushion the economic shock of COVID-19 and collapsing oil prices. Nigeria completed repayment of the loan’s principal on April 30, 2025. However, charges associated with its IMF financial position remained payable, with scheduled payments extending into 2029. The repayment is a milestone, but it does not mean Nigeria is free of other debts.
The IMF, however, does not classify Nigeria as being at high risk of debt distress. Its assessment says the debt remains sustainable, with the risk of sovereign stress considered moderate. The immediate danger is the pressure on public finances: as interest costs rise, less revenue is available for roads, hospitals, schools, security and social support. The Fund has urged stronger domestic revenue mobilisation and effective implementation of tax reforms.
Presidential spokesman Bayo Onanuga has argued that “The issue is not borrowing; it is what you do with the borrowed funds.” That is the central test for Nigeria. Loans that finance productive infrastructure, expand industry and generate jobs and revenue can support growth; borrowing that delivers little lasting value leaves future generations with the bill. The government must demonstrate tangible results, curb waste and account transparently for borrowed funds before mounting interest payments further constrain the economy.