Nigeria’s debt crisis easing on paper, but worsening in reality - Report

Nigeria’s debt burden remains dangerously high despite signs of stability in some headline indicators, according to a new report by the Nigerian Economic Summit Group (NESG), which warned that underlying fiscal pressures continue to threaten the country’s economic outlook.

• Nigeria’s debt stress remains elevated despite signs of stability in key fiscal indicators, according to the NESG.
• The group warned that improvements in debt-to-GDP ratios may be masking deeper structural weaknesses.
• Its Debt Burden Index is projected to remain within a high-risk band throughout 2025.
• Analysts say rising debt-service costs could further pressure spending on infrastructure, healthcare, and education.

In its May 2026 Debt Burden Monitor, the NESG said Nigeria’s Debt Burden Index (DBI) declined from a peak of 83.6 points in 2023 to 70.9 points in 2024, a development that could suggest easing debt stress at first glance.

However, the group stressed that the improvement was largely driven by a temporary moderation in debt-servicing pressures rather than by any meaningful strengthening of government finances.

The report argued that conventional debt indicators, particularly debt-to-GDP ratios, may be masking the country’s deeper fiscal vulnerabilities.

“Headline indicators suggest a degree of stabilisation, yet underlying fiscal pressures remain elevated when assessed through a more comprehensive lens,” the NESG said.

According to the report, Nigeria’s public debt-to-GDP ratio rose sharply to 40.6 percent in 2024, reflecting continued reliance on borrowing to finance budget deficits amid weak government revenues.

While the debt-to-GDP ratio is projected to decline to 37.7 percent by the fourth quarter of 2025, the NESG warned that the apparent improvement may not reflect stronger fiscal fundamentals. Instead, it said the change was largely due to valuation effects rather than genuine economic strengthening.

The report’s quarterly estimates show that debt pressures are expected to remain persistently high throughout 2025. The DBI is projected to rise to 78.4 points in the first quarter of the year, peak at 79.6 points in the second quarter, moderate slightly to 76.2 points in the third quarter, and end the year at 79.2 points.

“This pattern indicates that debt pressure has not structurally eased but instead fluctuates within a high-stress band,” the NESG noted.

One of the report’s strongest warnings concerns Nigeria’s debt service-to-revenue ratio, which it identifies as the primary driver of fiscal strain.

Analysts say the trend raises concerns over the government’s ability to fund critical sectors such as healthcare, education, infrastructure, and security while continuing to meet debt obligations.

The findings come at a time when Nigeria is pursuing fiscal reforms aimed at improving investor confidence, stabilising public finances, and attracting foreign capital. However, the NESG argued that the economy has yet to achieve a decisive shift toward debt sustainability.

“Overall, the 2024–2025 transition does not yet reflect a decisive shift toward debt sustainability,” the report stated, adding that improvements in headline figures continue to mask “persistent structural imbalances.”

The group maintained that the Debt Burden Index provides a more realistic picture of Nigeria’s fiscal condition than traditional debt metrics, signalling that the country remains in a “high-risk fiscal environment” despite apparent stabilisation in conventional indicators.