The International Monetary Fund (IMF) has issued a strong warning to Nigeria and other nations with rising debt profiles, urging immediate action to reduce debt burdens amid mounting economic pressure.

 

Speaking at a civil society organisation (CSO) town hall during the ongoing IMF-World Bank Annual Meetings, IMF Managing Director Kristalina Georgieva stressed that excessive debt is stifling economic growth and threatening financial stability in many countries.

 

“We have to be much, much more focused on bringing debt levels down, because very high levels of debt suffocate economies,” Georgieva stated.

 

Her comments come just days after Nigeria’s Debt Management Office (DMO) revealed that the country’s total public debt had risen to ₦152.39 trillion as of June 30, 2025, marking a dramatic spike in less than two years.

 

According to the DMO breakdown:

• Domestic debt stood at ₦80.55 trillion (approx. $52.67 billion)

• External debt reached ₦71.84 trillion (approx. $46.98 billion)

 

The figures represent a 348.6% increase from ₦33.3 trillion in June 2023, when President Bola Ahmed Tinubu assumed office.

 

In a further sign of fiscal pressure, Nigeria’s debt service-to-revenue ratio hit 156.8% by early May 2025 — a sharp rise from 29.1% in 2014 — indicating that the government now spends significantly more on debt repayment than it earns in revenue.

 

Amid these developments, President Tinubu last week sought parliamentary approval to borrow an additional $2.3 billion via Eurobond and issue $500 million in sukuk bonds to refinance maturing obligations and support infrastructure development.

 

Meanwhile, subnational debt is also climbing. The DMO reported that Lagos State recorded the highest domestic debt in Q1 2025 with ₦874.03 billion, followed by Rivers State at ₦364.39 billion, while Jigawa and Ondo States had the lowest figures at ₦1.06 billion and ₦11.76 billion respectively.

 

Georgieva noted that while debt in low-income countries appears to be declining, the reduction is not due to policy success but rather a lack of access to financing.

 

“Even if [debt levels] are going down, it is still incredibly difficult for low-income countries to cope,” she explained.

 

She added that the IMF is now prioritising policy frameworks focused on debt sustainability, especially in emerging and lower-middle-income economies like Nigeria.

 

The World Bank currently classifies Nigeria as a lower-middle-income country, a designation that reflects its income levels but not the growing fragility of its fiscal space.

 

As the international community gathers to address global financial challenges, Georgieva’s message serves as a cautionary call for Nigeria and its peers: without decisive debt management and revenue reforms, the long-term costs of borrowing could far outweigh the short-term gains.