IMF: Nigeria to Spend More Than Half of Revenue on Debt Servicing in 2026

The International Monetary Fund has warned that Nigeria is projected to spend a significant majority of its tax revenue on debt servicing in 2026, as the country’s debt burden continues to rise despite overall debt levels being described as sustainable.

The warning comes as the IMF concludes its 2026 Article IV consultation with Nigeria, its regular assessment of the country’s economic health and policy direction.

TheCable, citing the IMF, reported that the projected debt-service-to-revenue ratio would exceed the median for sub-Saharan African economies and place Nigeria among the countries most exposed to refinancing risks.

Premium Times reported that the IMF urged the Federal Government to deepen non-oil revenue mobilisation and accelerate the planned fuel-subsidy reforms to create fiscal space for development spending.

According to the IMF, Nigeria’s debt service obligations have been compounded by high global interest rates and the naira’s continued volatility, which have together inflated the local-currency cost of dollar-denominated debt.

The Fund also raised concerns about contingent liabilities from state-owned enterprises, exchange-rate guarantees, and government-backed loans, which it said are not fully captured in official debt statistics.

Thisday reported that the IMF noted the Federal Government’s recent efforts to raise more domestic revenue, including through tax reforms and the removal of fuel subsidies, but said more decisive action was needed to bring debt-service costs under control.

The IMF is expected to publish the full Article IV staff report in the coming days, which will contain its detailed policy recommendations for the Nigerian government.

Sources: TheCable; Premium Times; Thisday