IMF Warns Nigeria on Rising Public Debt Concerns

The International Monetary Fund (IMF) has raised concerns regarding Nigeria's escalating public debt, which is expected to rise from $51.9 billion in 2025 to $72.6 billion by 2027. The IMF cautions against a proposed $5 billion total return swap with the UAE lender First Abu Dhabi Bank, highlighting the risks associated with complex financial derivatives and potential margin calls due to naira depreciation.

The IMF emphasizes the need for the Nigerian government to heed these warnings and undertake reforms to strengthen macroeconomic stability and improve the country's ability to withstand external shocks. Additionally, the World Bank has echoed similar concerns about Nigeria's debt service-to-revenue ratio, warning that frequent borrowing could lead the country into a debt trap.

By the end of 2025, Nigeria's total public debt is projected to reach N159.27 trillion, with the Debt Management Office indicating that the debt profile consists of both domestic and external debt, primarily incurred by federal and state governments for various projects.