Nigeria’s Debt-to-GDP Ratio Expected to Hit 46.6% in 2024, says IMF

The International Monetary Fund (IMF) has forecasted that Nigeria’s public debt to Gross Domestic Product (GDP) ratio will rise to 46.6 percent in 2024, and further to 46.8 percent in 2025. This projection indicates a 0.3 percentage point increase in 2024 and a 0.5 percentage point increase in 2025 compared to the IMF’s previous forecast for 2023.

The IMF revealed these figures in its April 2024 Fiscal Monitor report titled “Fiscal Policy in the Great Election Year.” Additionally, it downgraded Nigeria’s fiscal balance-to-GDP ratio to -4.6 percent in 2024 from -4.2 percent in 2023.

The IMF highlighted that in low-income developing countries, a significant portion of loans on concessional terms, coupled with high inflation and favorable interest-growth differentials, have helped maintain average public debt-to-GDP ratios at around 50 percent since 2020. However, there was a slight increase to 53 percent in 2023, primarily due to exchange rate depreciation in Nigeria.

The report emphasized the heavy debt-service burdens borne by countries, with Nigeria’s debt-service burden accounting for around 56 percent of tax revenues. These high debt-servicing costs limit the ability of low-income developing countries to allocate resources to essential services and critical investments aimed at enhancing economic resilience and reducing poverty.

Furthermore, the IMF highlighted the risks associated with debt refinancing, particularly as substantial amounts of external debt, approximately $60 billion, are due for repayment in 2024–25, three times the average amount in the 2010s. While some low-income developing countries have returned to international markets to refinance maturing debt, governments are advised to carefully consider the trade-offs between current financing and future fiscal sustainability associated with issuing public debt at high costs.

In sub-Saharan Africa, fiscal balances have improved by 1.2 percentage points of GDP, attributed to lower spending and higher revenues. Overall, primary deficits in low-income developing countries are projected to decline further in 2024, with revenues expected to improve due to new tax measures and reduced exemptions, while expenditures are anticipated to rise modestly.


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