The International Monetary Fund (IMF) has cautioned Nigeria against excessive borrowing, urging authorities to prioritise debt sustainability and fiscal discipline over debates on funding sources.
Speaking on April 16, 2026, during a media briefing on the IMF’s Regional Economic Outlook for Sub-Saharan Africa, Abebe Aemro Selassie said the real concern is not whether Nigeria borrows externally or domestically, but whether its debt remains manageable.
“It is difficult to say whether to tilt toward external or domestic borrowing,” Selassie noted. “What is really important is to keep the level of debt as manageable as possible relative to repayment capacity.”
Nigeria’s total public debt has climbed to ₦159.28 trillion as of December 31, 2025, according to the Debt Management Office (DMO), with domestic borrowing accounting for a significant share of the increase.
Selassie emphasised that borrowing decisions should be guided by a broader assessment of debt sustainability, rather than a preference for any single financing option. He added that effective liability management—such as restructuring debt and extending repayment timelines—can help ease pressure on public finances.
“Extending maturities allows governments to spread out repayments and better manage obligations,” he explained.
Despite the rising debt profile, the IMF official expressed confidence in Nigeria’s capacity to manage its obligations, describing the DMO as “fantastic” and well-equipped to navigate complex debt dynamics.
The warning comes amid mounting fiscal pressure and global economic uncertainty, partly driven by geopolitical tensions in the Middle East, which continue to impact oil prices and borrowing conditions.
Meanwhile, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has called on global financial institutions—including the IMF and the World Bank—to ease borrowing costs for developing countries.
Speaking at a briefing of the Intergovernmental Group of Twenty-Four, Edun urged multilateral lenders to provide more liquidity and risk management tools to cushion the impact of rising debt burdens.
“We would like them to provide additional liquidity and instruments that reduce financing costs,” he said.
Data from the DMO shows Nigeria’s domestic debt rose from ₦81.82 trillion in September 2025 to ₦84.85 trillion by December, while external debt stood at ₦74.43 trillion—accounting for 46.73 percent of the total debt stock.
As debt levels continue to rise, the IMF’s message is clear: Nigeria’s borrowing strategy must be anchored on sustainability—or risk deeper fiscal strain in the years ahead.
