The Federal Government has approved a comprehensive Medium-Term Debt Management Strategy (MTDS) aimed at ensuring fiscal sustainability while supporting economic growth.
The Debt Management Office (DMO) stated that nominal debt as a percentage of GDP is projected to be capped at 60 percent by 2027, up from 52.25 percent at the end of December 2024.
Interest payments on public debt are expected to remain below 4.5 percent of GDP, compared with 3.75 percent in 2024, while sovereign guarantees will stay under 5 percent of GDP, rising from 2.09 percent.
The strategy also introduces a revised composition of Nigeria’s debt portfolio. The domestic-to-external debt mix has been adjusted to 55:45 from the previous 48:52, with at least 75 percent of domestic borrowing now in long-term instruments and a maximum of 25 percent in short-term obligations.
Debt maturing within one year will not exceed 15 percent of the total portfolio, while foreign exchange (FX) debt is capped at 45 percent of total debt.
These measures are designed to strengthen debt sustainability, reduce rollover risks, and limit exposure to currency fluctuations.
The DMO further highlighted that Nigeria’s current debt structure already exhibits relative stability. The average maturity of the debt portfolio stands at 11.05 years, with an average time to refixing of 10.74 years, both exceeding the minimum 10-year threshold under the new MTDS.
The agency also noted that in 2022, it strategically deployed economic tools to guide federal borrowing, ensuring that loans contracted aligned with long-term sustainability objectives.
According to the DMO, the strategy is intended to provide a clear framework for borrowing that balances financing needs with fiscal prudence, safeguards macroeconomic stability, and supports Nigeria’s economic development agenda.
By capping short-term liabilities and foreign currency exposure, the government aims to reduce vulnerabilities while maintaining flexibility for growth-oriented investments.
