Nigeria’s Debt Profile Needs Immediate Action, Analysts Counter IMF

Economic analysts have raised concerns over Nigeria’s rising debt burden, calling for immediate fiscal reforms to prevent long-term economic instability. Their warnings come in response to recent comments from the International Monetary Fund (IMF), which suggested that Nigeria’s debt level remains sustainable despite its rapid growth. Analysts, however, argue that without urgent intervention, the country could face severe economic consequences, including reduced public spending, higher borrowing costs, and weaker investor confidence.

Nigeria’s total public debt has ballooned in recent years, driven by frequent borrowings to finance budget deficits, infrastructure projects, and fuel subsidies. While the government has defended these loans as necessary for development, experts warn that the mounting debt service obligations are squeezing public finances. With a significant portion of revenue allocated to debt repayment, there are growing concerns about the government’s ability to fund critical sectors such as healthcare, education, and social welfare.

Some analysts challenge the IMF’s optimistic stance, pointing out that Nigeria’s debt sustainability should not only be measured by its current debt-to-GDP ratio but also by its revenue generation capacity. Nigeria has one of the lowest revenue-to-GDP ratios in the world, making it increasingly difficult to meet its debt obligations without further borrowing. The country’s overreliance on oil revenue, coupled with foreign exchange fluctuations and inflation, further complicates its fiscal outlook.

To address the issue, economic experts are advocating for a comprehensive debt restructuring plan and enhanced revenue mobilization strategies. They urge the government to focus on diversifying revenue sources, improving tax collection, and reducing dependency on external loans. Some have also suggested cutting unnecessary government expenditures and eliminating costly fuel subsidies to free up funds for more productive investments.

Despite these concerns, the government has maintained that its borrowing strategy is within reasonable limits and that funds are being channeled toward projects that will spur economic growth. However, with debt servicing costs rising and the naira facing continued pressure, many believe that without decisive policy actions, Nigeria’s fiscal situation could become more precarious.

As debates over the country’s debt profile continue, experts warn that proactive measures must be taken to prevent Nigeria from falling into a deeper financial crisis. The coming months will be critical in determining whether the government will implement necessary reforms or continue on its current borrowing trajectory, risking further economic strain.