The latest International Monetary Fund (IMF) projections on Nigeria’s external debt have understandably generated concern. According to the Fund, the country’s public external debt could rise from $51.9 billion in 2025 to $72.6 billion by 2027, representing an increase of nearly $20.7 billion within two years. The figures are substantial, and they deserve serious scrutiny. Yet we must be careful not to allow the headline numbers to obscure a more important reality: Nigeria today is in a far stronger economic position than it was just three years ago, and much of that improvement is the direct result of difficult reforms that many initially opposed.
What stands out in the IMF report is not merely the debt projection. It is the Fund’s acknowledgement that Nigeria’s recent reforms have strengthened macroeconomic stability, improved resilience and enhanced the country’s ability to withstand external shocks. The IMF’s Mission Chief for Nigeria, Axel Schimmelpfennig, was explicit on this point, stating that “strong reforms over the past three years have improved macroeconomic outcomes and improved resilience.” That admission deserves as much attention as the debt forecasts themselves.
For too long, Nigeria postponed difficult economic decisions. Successive governments often preferred temporary fixes to structural solutions. The result was an economy vulnerable to external shocks, burdened by distortions and struggling to attract the scale of investment required for sustained growth. The reforms undertaken under President Bola Tinubu have sought to change that trajectory. They have not been painless. Few serious reforms ever are. But the question before us is whether Nigeria should retreat from reform because borrowing may increase, or whether it should continue strengthening the foundations of a more resilient economy.
The IMF itself continues to classify Nigeria’s sovereign debt risk as moderate. It also notes that public debt declined to 36.1 percent of GDP in 2025 from 39.3 percent in 2024, helped by stronger growth, naira appreciation and broader macroeconomic improvements. These are not the characteristics of an economy moving toward crisis. They are indicators of an economy attempting to restore stability after years of accumulated imbalances.
Of course, debt matters. Every naira or dollar borrowed today creates obligations tomorrow. We should therefore welcome the IMF’s caution regarding the proposed $5 billion Total Return Swap arrangement with First Abu Dhabi Bank. The Fund’s concerns about transparency, margin-call risks and potential policy constraints deserve careful consideration. Governments must always exercise caution when pursuing complex financing structures, particularly those that may expose public finances to unforeseen risks.
Yet caution should not be mistaken for alarm.
What some critics conveniently ignore is that countries do not borrow in a vacuum. They borrow to finance deficits, build infrastructure, support development priorities and manage economic transitions. The real issue is not whether Nigeria borrows. The real issue is whether borrowed funds are deployed productively and whether economic growth ultimately outpaces debt accumulation.
On this score, the administration’s broader strategy deserves a fair assessment.
The IMF projects that Nigeria’s economy will grow by 4.1 percent in 2026 and 4.3 percent in 2027 despite global uncertainties and the economic consequences of the ongoing Middle East conflict. Those growth projections may not appear spectacular, but they suggest an economy moving in the right direction at a time when many emerging markets face significant headwinds.
We are also encouraged by the IMF’s endorsement of several key policy directions. The Fund supports the continuation of a flexible exchange rate regime, further revenue mobilisation reforms, improvements in infrastructure and electricity supply, expansion of social protection programmes and sustained investment in agriculture, education and healthcare. These are precisely the areas that determine whether economic growth becomes inclusive and sustainable.
Perhaps the most important warning in the IMF report relates not to debt but to fiscal discipline. The Fund cautions that election-related spending pressures, weak revenue mobilisation and expenditure slippages could worsen the debt outlook. That warning should be taken seriously. Nigeria cannot afford a return to the culture of fiscal indiscipline that has undermined previous reform efforts. The approach to the 2027 elections must not become an excuse for abandoning economic prudence.
This is where the administration faces its greatest test. The challenge is no longer introducing reforms. The challenge is sustaining them. It is maintaining fiscal discipline when political pressures intensify. It is expanding revenue without stifling growth. It is borrowing responsibly while ensuring that every borrowed dollar contributes to productive economic activity.
The debate therefore should not be framed as debt versus no debt. It should be framed as productive debt versus wasteful debt, disciplined borrowing versus reckless borrowing, long-term investment versus short-term political expediency.
The road ahead will require discipline, transparency and careful management of public finances. But it would be a profound mistake to interpret every debt projection as evidence of impending crisis. What matters most is whether Nigeria continues to build an economy capable of generating growth, attracting investment and creating opportunities for its citizens.
The IMF has issued a warning. We should heed it. But we should also recognise that the same report contains a less publicised message: the reforms are working, resilience is improving and Nigeria is better positioned today than it was before this reform journey began.
