By Gee Onyedinma
The Nigerian Economic Summit Group has faulted the Federal Government’s continued dependence on borrowing to finance budgets, warning that the trend is deepening pressure on the country’s fragile fiscal position despite temporary improvements in some debt indicators.
In its latest Debt Burden Monitor titled, “Debt pressure persists beneath surface stability: DBI signals elevated fiscal strain in 2025,” the policy think tank said Nigeria’s apparent debt stability masks deeper structural weaknesses driven by poor revenue mobilisation, widening fiscal deficits and rising debt servicing obligations.
According to the report, Nigeria’s Debt Burden Index (DBI) declined from 83.6 points in 2023 to 70.9 points in 2024, suggesting a moderation in debt stress. However, the NESG stressed that the improvement did not result from stronger fiscal reforms or enhanced government earning capacity. “At face value, this suggests an easing of debt stress. However, this improvement was largely driven by a partial moderation in debt service pressures, rather than a fundamental strengthening of fiscal capacity,” the report stated.
The group noted that Nigeria’s public debt-to-GDP ratio climbed to 40.6 per cent in 2024, reflecting what it described as sustained reliance on borrowing to bridge revenue gaps and finance fiscal deficits. It warned that the divergence between the declining DBI and the rising debt stock showed that the country’s fiscal vulnerabilities remained severe beneath the surface.
Highlighting the 2025 outlook, the NESG disclosed that debt pressure remained elevated throughout the year, with the DBI projected at 78.4 points in the first quarter, peaking at 79.6 points in the second quarter before ending the year at an estimated 79.2 points. “This pattern indicates that debt pressure has not structurally eased but instead fluctuates within a high-stress band,” the report noted, adding that “headline ratios are masking persistent structural imbalances.”
The warning comes as the Debt Management Office disclosed that Nigeria’s total public debt rose to N159.28 trillion as of December 31, while debt servicing climbed to nearly N16 trillion, largely driven by rising domestic interest payments and external debt obligations. Despite repeated calls for fiscal consolidation, the Federal Government plans to borrow about N23.85 trillion to fund the 2026 budget, amid fears that weak revenue generation could push the fiscal deficit beyond projections.
The concerns raised by the NESG also align with recent observations by the International Monetary Fund during the 2025 IMF/World Bank Spring Meetings in Washington DC. The IMF said Nigeria must strengthen fiscal buffers and reduce vulnerability to shocks, warning that “macroeconomic policies need to further strengthen buffers and resilience.” The Fund also stressed that savings from subsidy reforms should be redirected into critical investments and social support programmes to avoid worsening fiscal strain.
With additional reports from the Guardian