Nigeria’s Public Debt May Hit N200tn Before 2027 Elections — Economists

…Backs Speaker, Say Rising Obligations Weighing Heavily On Revenue

Nigeria’s public debt stock could climb to N200tn before the 2027 general elections if the current pace of borrowing continues, a development that may worsen the country’s fiscal vulnerabilities, according to the Chief Economist at SPM Professionals, Paul Alaje.

Speaking in an interview on Arise TV, Alaje warned that Nigeria’s rising debt profile was already exerting severe pressure on government revenues and crowding out private sector investments.

He stressed that the country was approaching dangerous thresholds in key debt sustainability indicators.

“By May 2027, the numbers we are projecting show Nigeria’s debt could rise to about N200tn. If borrowing continues at this pace, and revenues don’t improve significantly, we might return to spending up to 90 percent of government earnings just on debt service,” he cautioned.

Nigeria’s Debt Management Office (DMO) puts the nation’s public debt at about N97tn as of the first quarter of 2024, but Alaje noted that the rate of increase was alarming.

He explained that while the debt-to-GDP ratio of 39.4 percent remains within legal limits, the debt service-to-revenue ratio which is currently around 70 to 74 percent is more than double the acceptable benchmark of 33 percent.

“In practical terms,” he explained, “for every N100 Nigeria earns, between N68 and N70 goes into debt servicing. That leaves little room for funding education, healthcare, or infrastructure.”

Another worrying sign, according to Alaje, is the gap between the economy’s growth and the growth of public debt.

“While GDP grew by around four percent, the country’s debt stock expanded by over 22 percent in the past year. That kind of imbalance is unsustainable,” he said.

He argued that if borrowing truly translated into broad-based development, Nigerians would see infrastructure projects spread across the country, not just in Abuja or parts of Lagos.

The economist highlighted the risks in both domestic and foreign borrowings. Locally, he noted, government debt instruments such as bonds and treasury bills crowd out private sector access to finance, as banks prefer lending to government at near-zero risk. This, he said, stifles entrepreneurship and job creation.

Externally, he pointed to Nigeria’s volatile exchange rate as a major risk factor.

“Two years ago, the official exchange rate was below ₦500 to the dollar. Today, it is around N1,500. That’s a 300 percent depreciation. For a country whose loans are denominated in foreign currency, that is dangerous,” Alaje warned.

Alaje suggested that Nigeria could avoid excessive borrowing if it optimized revenue collection, cut down on the cost of governance, and restructured its budgetary priorities.

He recommended shifting the budget formula from the current heavy tilt towards recurrent spending to a 60:40 split in favour of capital expenditure.

He called for greater transparency in public spending, noting that “some budgeted items are overpriced, raising questions about prudence.”

He argued that with improved revenue mobilization without overtaxing the poor Nigeria could meet its financing needs without resorting to debt.

Responding to comparisons with advanced economies, Alaje dismissed arguments that Nigeria could borrow like the United States.

“America borrows in its own currency, the dollar, which is a global reserve currency. Nigeria cannot print naira to pay international creditors. If we attempt that, the economy will collapse. We must get serious about our debt,” he said.

While acknowledging that some borrowing may be necessary for infrastructure, Alaje insisted that unchecked accumulation of debt would mortgage Nigeria’s future.

“If Nigeria reaches N300tn in debt without corresponding revenue growth, the country risks falling back to spending nearly all of its revenue on debt servicing. That will worsen poverty, hunger, and unemployment,” he warned.

The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, had cautioned that Nigeria could face increasing borrowing costs unless the Tinubu administration adopts a more strategic and results-oriented approach to debt management.

Rewane urged the federal government to prioritise efficiency and impact in its borrowing decisions.

“We need to be very intentional, very strategic and focus on what we are borrowing for—to generate revenue and have an impact—so that people can begin to reap the dividends of reforms and democracy,” Rewane said, stressing that the current borrowing trajectory must be aligned with measurable economic returns.

Rewane explained that Nigeria’s access to affordable financing is becoming increasingly uncertain due to delayed global interest rate cuts.

“We were anticipating borrowing under the assumption that interest rates would fall, easing the debt service burden. But with the delay in rate cuts until late 2025 or beyond, Nigeria may now be forced to raise funds at higher rates than originally expected,” he said.

The implication, he noted, is that the government must become more prudent and selective with its borrowing, ensuring that all new loans are tied to revenue-generating or economically productive projects.

“What are we borrowing for? Are those budgets going to generate enough revenue to service those debts? Those are the key elements,” he warned.

The Speaker of the House of Representatives, Tajudeen Abbas had called for transparency and accountability in public borrowing, with effective oversight by the federal legislature.

This, according to him, would ensure that loans translate into real development in the areas or roads, schools, hospitals and other critical infrastructure.

The Speaker’s position on public borrowing was clarified on Monday night by his Special Adviser on New Media, Jowosimi Enitan.

The clarification became necessary following an earlier report quoting the Speaker to have condemned the rising borrowing by the federal government.

The said report had quoted the House Committee Chairman on Public Accounts, Rep Bamidele Salam who represented the Speaker at an official event earlier in the day.

Salam, who stood in for the Speaker at the conference of West Africa Association of Public Accounts Committees, had expressed concerns that Nigeria’s debt had reached “a critical point” and called for urgent reforms in borrowing practices and oversight.

“As of the first quarter of 2025, Nigeria’s total public debt stood at N149.39tn, equivalent to about $97bn.

“Even more concerning is the debt-to-GDP ratio, which now stands at roughly 52 percent, well above the statutory ceiling of 40 percent set by our own laws.

“This is not just a budgetary concern but a structural crisis that demands urgent parliamentary attention and coordinated reform,” the representative of the Speaker was quoted as saying.

Nigeria’s Public Debt May Hit N200tn Before 2027 Elections — Economists is first published on The Whistler Newspaper