Debt service projected to gulp 71.7% of revenue by 2030
AI Executive Briefing
Gemini Flash AI~45s readThe Debt Management Office (DMO) projects that Nigeria's debt service-to-revenue ratio will climb to 71.7% by 2030, breaching the 50% sustainability threshold. Despite a positive outlook for the debt-to-GDP ratio, the government's fiscal space remains severely constrained by rising borrowing costs and insufficient revenue growth.
Context & Background
- ✦The DMO's 2024 Debt Sustainability Analysis highlights that Nigeria's debt sustainability is moderate but highly vulnerable to exchange rate depreciation and global economic uncertainties.
- ✦The report emphasizes that lower debt-to-GDP ratios do not equate to improved debt affordability if government revenue fails to keep pace with debt obligations.
Key Figures & Named Entities
Debt Management Office (DMO):Warns of a potential 97.3% debt service-to-revenue ratio under shock scenarios by 2030.975.58 basis points:The average Eurobond spread recorded between October 2 and December 31, 2024, exceeding the 600-basis-point threshold.
Outlook & Next Steps
The DMO recommends sustained subsidy removal, a unified exchange rate regime, expanded tax collection, and prioritizing growth-enhancing investments to mitigate fiscal risks.
Key Takeaways
AI Summary- Nigeria's debt service-to-revenue ratio is projected to reach 71.7% by 2030, significantly exceeding the Debt Management Office's recommended 50% threshold.
- While the public debt-to-GDP ratio is expected to decline to 27.3% by 2030, the government faces severe fiscal pressure as debt servicing costs grow faster than revenue.
- The DMO warns that under adverse shock scenarios, debt servicing could consume up to 97.3% of federal revenue by 2030.
Key Facts:2025: Nigeria spent N8.61 trillion on domestic debt servicing in 2025.First six months of 2026: The Federal Government incurred N5.28 trillion in domestic debt-service expenditure during the first six months of 2026.
Editorial Excerpt
Nigeria’s debt service-to-revenue ratio is projected to rise to 71.7 per cent by 2030, exceeding the 50 per cent threshold recommended by the Debt Management...
Frequently Asked Questions About This Story
Why is the debt service-to-revenue ratio rising despite a projected decline in the debt-to-GDP ratio?
The DMO attributes this to debt servicing costs growing at a faster rate than government revenue, compounded by weak revenue mobilization.
What specific risks does the DMO identify regarding Nigeria's current debt profile?
The DMO identifies elevated financing, refinancing, and foreign exchange risks, noting that non-residents hold 49% of public debt, which exceeds the 45% threshold.
