Nigeria's Debt Crisis: New $1.25 Billion Loan Request

Nigeria's debt situation has reached a critical point as the Bola Ahmed Tinubu administration requests a new loan of $1.25 billion from the World Bank. This request comes amid rising public debt, which increased to ₦49.85 trillion in early 2023 and is projected to reach ₦159 trillion by December 2025.

The debt-to-GDP ratio is expected to remain moderate at 32-35% in 2026, below the high-risk threshold identified by the International Monetary Fund (IMF). However, the debt service-to-revenue ratio is alarming, with projections indicating that debt service will consume 64.5% of Nigeria's total federal revenue in 2023.

The Nigerian Economic Summit Group (NESG) forecasts that by 2025, the debt service-to-revenue ratio could range between 90-130%. The government is facing a significant tax revenue shortfall, which complicates its fiscal strategy and raises questions about the sustainability of further borrowing.