Nigeria’s external debt stock is projected to rise significantly over the next two years as the country continues to rely on foreign borrowing to support fiscal operations, infrastructure development and economic reforms, according to projections released by the International Monetary Fund (IMF).
The IMF estimates that Nigeria’s public external debt could increase by more than $20 billion between 2025 and 2027.
The projection suggests that Nigeria’s external obligations may approach $73 billion by 2027, representing a notable increase from current levels and underscoring the growing importance of debt management in the country’s economic strategy.
Analysts say the expected rise in external debt is linked to ongoing efforts to close fiscal gaps, fund critical infrastructure projects and support development priorities amid limited revenue generation and persistent financing pressures.
While foreign borrowing provides access to long-term capital and can help finance productive investments, economists have cautioned that rising debt levels could place additional pressure on public finances if revenue growth fails to keep pace with debt obligations.
Debt sustainability remains a key issue for policymakers as Nigeria continues to implement economic reforms aimed at strengthening government revenue, improving foreign exchange liquidity and attracting private sector investment.
Experts note that external debt differs from domestic borrowing because it is often denominated in foreign currencies, making repayment costs sensitive to exchange rate movements and global interest rate trends.
The country has undertaken several measures in recent years to improve fiscal stability, including efforts to broaden the tax base, reduce revenue leakages and improve efficiency in public spending.
However, financing needs remain elevated due to infrastructure deficits, population growth and development requirements.
Financial market participants are closely monitoring the trajectory of Nigeria’s debt profile, particularly the relationship between borrowing levels, export earnings and government revenue performance.
Stronger export growth and increased foreign exchange inflows could help improve the country’s capacity to meet future debt obligations.
The IMF has consistently emphasized the importance of maintaining prudent fiscal management while implementing reforms that encourage private investment, expand economic productivity and strengthen revenue mobilisation.
Economic observers argue that the long-term impact of additional borrowing will largely depend on how effectively borrowed funds are deployed.
Investments that improve productivity, expand industrial capacity and support economic diversification could enhance the country’s ability to generate returns sufficient to service future obligations.
As Nigeria pursues its economic transformation agenda, balancing development financing needs with debt sustainability considerations is expected to remain a central policy challenge over the coming years.
With external debt projected to increase further through 2027, investors and policymakers alike will be watching closely for progress in revenue growth, export expansion and fiscal reforms that can support long-term economic stability.
