Economic think-tank says fiscal pressures remain dangerously high despite signs of temporary stability in government debt indicators…..
Fresh concerns are mounting over Nigeria’s rising debt burden as projections for 2026 indicate that the Federal Government could take on nearly N29 trillion in new borrowings to finance widening fiscal gaps.
The warning comes from the Nigerian Economic Summit Group, which says the country’s debt situation remains fragile despite what appears to be temporary improvement in some headline indicators.
In its latest Debt Burden Monitor for May 2026 released on Tuesday, the NESG cautioned that Nigeria’s fiscal pressures remain severe beneath the surface, with debt sustainability risks continuing to intensify.
According to the economic think-tank, the country’s Debt Burden Index, a broader measure used to assess fiscal stress shows that Nigeria is still operating within a high-risk debt environment.
“Nigeria’s debt profile presents a nuanced but concerning picture as the economy transitions from 2024 into 2025,” the report stated.
“Headline indicators suggest a degree of stabilisation, yet underlying fiscal pressures remain elevated when assessed through a more comprehensive lens.”
The NESG explained that while the Debt Burden Index dropped to 70.9 points in 2024 from a record 83.6 points in 2023, the improvement was not driven by stronger fiscal performance but rather by a temporary easing in debt servicing pressure.
At the same time, the country’s public debt-to-GDP ratio climbed sharply to 40.6 per cent, reflecting continued dependence on borrowing to fund budget deficits and compensate for weak government revenue generation.
According to the report, this contradiction highlights deeper structural weaknesses within Nigeria’s public finance system.
The group further warned that debt pressure remained volatile throughout 2025, with quarterly Debt Burden Index estimates staying within what it described as a “high-stress band.”
The index reportedly rose to 78.4 points in the first quarter of 2025 and climbed further to 79.6 points in the second quarter before easing slightly later in the year.
Despite the fluctuations, the NESG said the broader trend shows that Nigeria has not achieved any meaningful shift toward long-term debt sustainability.
“Overall, the 2024–2025 transition does not yet reflect a decisive shift toward debt sustainability,” the report noted.
“Rather, it signals a system making only marginal adjustments, with improvements in headline ratios masking persistent structural imbalances.”
As of December 31, 2025, Nigeria’s total public debt stood at N159.28 trillion, including external debt estimated at $51.86bn.
Analysts now project that the country’s debt stock could rise to between N180 trillion and N200 trillion in the medium term if current borrowing trends continue.
The concerns are being amplified by details of the Federal Government’s 2026 fiscal plan, which proposes total expenditure of N68.32 trillion against projected revenue of N36.87 trillion.
The gap leaves a deficit exceeding N20 trillion, much of which is expected to be financed through fresh borrowing.
Although earlier estimates projected new borrowings at about N17.89 trillion, revised projections now place the figure closer to N29.2 trillion, sparking renewed anxiety among economists and investors.
Experts warn that rising debt levels could significantly increase debt servicing obligations, worsen inflationary pressures, weaken the naira and reduce credit available to the private sector.
Current estimates already show that Nigeria may spend between N15.5 trillion and N15.9 trillion on debt servicing alone in 2026.
The NESG stressed that without major fiscal reforms, stronger revenue mobilisation and reduced dependence on debt financing, Nigeria’s debt burden could become increasingly difficult to manage.
Economic analysts also warn that excessive borrowing could further constrain government spending on critical sectors such as infrastructure, healthcare and education while increasing pressure on future generations.
The latest concerns come as policymakers continue searching for ways to stabilise public finances amid slow economic growth, weak oil revenue performance and persistent pressure on government spending.
