ABUJA, Nigeria (VOICE OF NAIJA) –Nigeria’s debt stress has reached a record high, based on findings from the new Debt Burden Index a composite metric developed to measure the country’s real fiscal pressure.
The report, released by the Nigerian Economic Summit Group during its annual conference in Abuja, revealed that between 2020 and 2023, Nigeria’s index rose to 83.6 points, reflecting the impact of pandemic-era borrowing, revenue collapse, and debt service costs that exceeded total government income.
According to the report, the country’s debt structure has become increasingly fragile and fiscally draining, underscoring the urgent need for comprehensive reform.
As of August, Nigeria had spent $2.86 billion servicing external debt, slightly below the $3.06 billion spent during the same period in 2024.
This represents 69.1 per cent of the nation’s total foreign payments of $4.14 billion within the review period.
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The report outlined four key phases in Nigeria’s debt evolution from 2006 to 2024. The Post-Relief Compression period (2006–2014) recorded low index levels below 10 points, driven by debt relief and strong oil earnings.
The Debt Crisis Acceleration phase (2015–2019) saw stress levels rise above 30 points, caused by oil price shocks, growing domestic borrowing, and weak revenue mobilisation.
The Fiscal Exhaustion phase (2020–2023) peaked at 83.6 points, fueled by COVID-19-related loans, revenue decline, and debt servicing that consumed over 100 per cent of total income.
The Tentative Reversal phase (2024–2025) reflected slight relief at 70.9 points estimated at 69.0 in the first quarter of 2025 aided by fuel subsidy removal and foreign exchange reforms, though fiscal strain remains severe.
The index, according to the report, offers a more accurate measure of fiscal pressure than the traditional debt-to-GDP ratio, as it integrates solvency, liquidity, and revenue capacity into one comprehensive indicator.
“Nigeria stands at a critical juncture in its fiscal affairs,” the analysis stated. “While public debt metrics appear moderate by global standards, the index presents a more sobering reality, one of structural fragility and fiscal exhaustion driven by weak revenue mobilisation, rigid debt service obligations, and exposure to foreign exchange-sensitive liabilities.”
Although there was slight improvement in 2024, the report warned that the rising debt burden continues to erode fiscal space, constrain development spending, and threaten macroeconomic stability.
It further urged the government to realign borrowing practices, strengthen fiscal institutions, and overhaul the revenue framework.
“The pathway out of Nigeria’s debt vulnerability is not austerity,” the report noted, “but strategic statecraft anchored in transparency, productivity, and fiscal justice.
Nigeria must recalibrate its entire fiscal architecture to serve the goals of growth, equity, and intergenerational sustainability.”
The Debt Burden Index was constructed using five internationally recognised indicators endorsed by the International Monetary Fund and the World Bank, including domestic and external debt-to-GDP ratios, debt service-to-exports, and debt service-to-revenue metrics.
Beyond measurement, the index provides a framework for fiscal discipline, recommending that future borrowing be tied to productive, growth-driven projects with measurable returns.
It also emphasised the importance of domestic revenue reforms such as improving value-added tax efficiency, enforcing mining royalties, and implementing digital property taxation.
The report further advocated for stronger private sector participation through Public-Private Partnerships, equity-based infrastructure financing, and crowd-sourced investments in public assets.
It called for a national shift toward net worth-based debt management, ensuring that any increase in liabilities is matched or exceeded by growth in national assets.
Lastly, it urged deep institutional reforms to enhance debt transparency, coordinate subnational borrowing, and enforce rules-based fiscal governance.