The federal government has approved Nigeria’s Medium-Term Debt Management Strategy (MTDS) for 2024–2027, setting a ceiling of 60 percent for the debt-to-gross domestic product (GDP) ratio.
In a statement, the Debt Management Office (DMO) said the MTDS, developed with technical support from the World Bank and International Monetary Fund (IMF), is designed to ensure debt sustainability while meeting the country’s financing needs.
“The key objectives of the MTDS are to meet the Government’s financing needs and payment obligations in the short to medium term, taking into consideration the costs and risks trade-offs in the debt portfolio,” the DMO said.
It added that the framework seeks to balance borrowing costs with associated risks, deepen the domestic securities market, and optimise Nigeria’s debt composition.
According to the DMO, nominal debt as a percentage of GDP is expected to be capped at 60 percent by 2027, compared to 52.25 percent at the end of December 2024. Interest payments will not exceed 4.5 percent of GDP, up from 3.75 percent in 2024, while sovereign guarantees will remain below 5 percent of GDP, up from 2.09 percent.
The composition of the debt portfolio has also been revised, with the domestic-to-external debt mix now set at 55:45 compared to 48:52 previously. At least 75 percent of domestic borrowing will be long-term instruments, while a maximum of 25 percent will be short-term. Debt maturing within one year will not exceed 15 percent of the total portfolio, the agency said.
Foreign exchange (FX) debt is to be capped at 45 percent of total debt. The DMO added that Nigeria’s average debt maturity of 11.05 years and average time to refixing of 10.74 years already exceed the minimum thresholds of 10 years under the new strategy, reflecting relative stability in the debt structure.
The DMO noted that in 2022 it deployed economic tools and strategies in contracting loans for the federal government, with the aim of ensuring debt sustainability.
Boluwatife Enome
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