Nigeria’s debt service-to-revenue ratio to hit 71.7% by 2030 – DMO
AI Executive Briefing
Gemini Flash AI~45s readThe Debt Management Office (DMO) 2024 Debt Sustainability Analysis projects that Nigeria's debt service-to-revenue ratio will reach 71.7% by 2030 under baseline conditions. Despite a projected decline in the debt-to-GDP ratio, the government faces significant fiscal pressure as debt servicing costs outpace revenue growth.
Context & Background
- ✦Nigeria's debt portfolio is currently classified as having moderate sustainability but remains highly vulnerable to exchange rate devaluation and weak revenue mobilization.
- ✦High debt servicing costs limit the fiscal space available for critical infrastructure and social service investments, creating a long-term challenge for budget priorities.
Key Figures & Named Entities
Debt Management Office (DMO):Released the 2024 Debt Sustainability Analysis report.71.7%:Projected debt service-to-revenue ratio by 2030 under the baseline scenario.975.58 basis points:Average Eurobond spread recorded between October and December 2024.
Outlook & Next Steps
The government is advised to prioritize revenue mobilization through tax reforms and asset privatization while shifting toward concessional financing to manage elevated refinancing and foreign exchange risks.
Key Takeaways
AI Summary- Nigeria's debt service-to-revenue ratio is projected to climb to 71.7% by 2030, significantly exceeding the DMO's recommended 50% sustainability threshold.
- While the public debt-to-GDP ratio is expected to decline to 27.3% by 2030, the DMO warns that debt servicing costs remain a critical risk due to weak revenue mobilization and exchange rate volatility.
- The DMO recommends aggressive fiscal reforms, including tax base expansion, improved expenditure efficiency, and the continued removal of the PMS subsidy to mitigate rising debt risks.
Key Facts:2025-2026: Nigeria's debt service-to-revenue ratio is projected to fall to 44.9% in 2025 before rising to 51% in 2026.October 2 - December 31, 2024: The average Eurobond spread reached 975.58 basis points between October 2 and December 31, 2024, surpassing the 600-basis-point threshold.First half of 2026: Nigeria spent $1.82 billion servicing external debt in the first half of 2026.
Editorial Excerpt
Nigeria’s debt service-to-Federal Government revenue ratio is projected to rise to 71.7% by 2030 under the baseline scenario, exceeding the 50% threshold recommended by the Debt Management Office (DMO) and increasing pressure on public finances.
Frequently Asked Questions About This Story
What is the primary reason for the projected increase in the debt service-to-revenue ratio?
The DMO attributes the increase to debt servicing costs growing at a faster rate than government revenue.
What fiscal measures does the DMO suggest to improve debt sustainability?
The DMO recommends sustaining the removal of the PMS subsidy, maintaining a unified exchange rate, expanding the tax base through technology and reform, and improving public expenditure efficiency.
