By Seun Ibiyemi
The Nigerian Economic Summit Group (NESG) has raised fresh concerns over Nigeria’s debt profile, warning that recent improvements in headline indicators do not reflect a real easing of fiscal pressure on government finances.
In its Debt Burden Monitor for the fourth quarter of 2025, the policy think tank said the country remains trapped in a cycle where a large share of government revenue is consumed by debt servicing, leaving limited fiscal space for infrastructure, healthcare, education and other critical development needs.
The report comes at a time when official economic indicators have shown mixed signals of stability, particularly in debt ratios and inflation trends.
However, NESG argues that beneath these surface-level improvements, Nigeria’s fiscal structure remains fragile.
Debt ratios improve, but not from stronger fundamentals
According to the report, Nigeria’s Debt Burden Index (DBI) declined from 83.6 points in 2023 to 70.9 points in 2024, a development that might suggest some easing of debt pressure.
However, NESG cautioned that the improvement was not driven by stronger revenue generation or meaningful fiscal reforms.
Instead, it attributed the decline largely to temporary reductions in debt servicing pressure and valuation effects rather than structural economic gains.
This distinction, the group noted, is critical in assessing long-term sustainability.
Revenue Weakness Remains the Core Problem
A central concern highlighted by the NESG is Nigeria’s persistent low revenue base, which continues to amplify the country’s debt vulnerability.
The report stressed that the debt service-to-revenue ratio remains the most pressing fiscal challenge, meaning that a significant portion of government earnings is still being directed toward loan repayments instead of development spending.
This imbalance, analysts say, continues to constrain the government’s ability to invest in productive sectors that could stimulate growth and reduce future borrowing needs.
Rising Debt-to-GDP Despite Short-Term Projections
The NESG also noted that Nigeria’s debt-to-GDP ratio rose to 40.6 per cent in 2024, driven largely by continued borrowing to finance budget deficits and weak revenue performance.
Although projections suggest a decline to 37.7 per cent by the end of 2025, the group warned that such movement does not necessarily indicate improved fiscal health.
Rather, it argued that the apparent decline reflects valuation adjustments and statistical changes rather than a genuine reduction in debt vulnerability.
Fluctuating Debt Pressure Signals Instability
The report further revealed that Nigeria’s debt pressure has remained volatile throughout 2025.
The Debt Burden Index was estimated at:
78.4 points in Q1 2025, 79.6 points in Q2 2025, 76.2 points in Q3 2025 79.2 points projected for Q4 2025.
NESG said this pattern reflects a system stuck in a high-risk fiscal range, with no sustained downward trend in debt stress.
“No clear path to debt sustainability”
Perhaps the most critical assessment in the report is the warning that Nigeria is yet to show a clear transition toward debt sustainability.
The NESG stated that while some macroeconomic indicators appear stable on the surface, underlying fiscal weaknesses—particularly low revenue mobilisation and heavy borrowing—remain largely unresolved.
According to the group, the current situation represents only “marginal adjustments” rather than the deep structural reforms required to stabilise public finances in the long term.
A warning for fiscal policy direction
The findings place renewed pressure on policymakers to address Nigeria’s revenue challenges and reduce reliance on borrowing as a primary funding strategy.
Economic analysts say the report reinforces long-standing concerns that without stronger revenue generation and tighter fiscal discipline, Nigeria risks remaining trapped in a high-debt, low-revenue cycle that limits growth and development outcomes.
For now, the NESG’s warning serves as a reminder that while indicators may appear to be improving, the underlying fiscal reality remains far more complex—and potentially fragile
