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FG Approves New Debt Strategy, Sets 60% Debt-to-GDP Ceiling by 2027
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Infinity Media
67 days agoAbuja, August 24, 2025 – The Federal Government has approved a new Medium-Term Debt Management Strategy (MTDS) covering the period 2024–2027, with a key provision to cap Nigeria’s debt-to-GDP ratio at 60% by 2027.
The approval was granted by the Federal Executive Council (FEC) following a proposal from the Debt Management Office (DMO). According to the DMO, the strategy is designed to maintain debt sustainability, manage risks, and strengthen investor confidence in the country’s financial stability.
The new MTDS was developed in line with international best practices, with technical support from the World Bank and the International Monetary Fund (IMF).
Key Highlights of the Debt Strategy
Debt-to-GDP Ratio: Expected to rise from 52.25% in 2024, but capped at 60% by 2027.
Interest Payments-to-GDP: Raised from 3.75% to 4.5%.
Sovereign Guarantees-to-GDP: Set at a ceiling of 5%, up from 2.09%.
Debt Composition: Domestic-to-external ratio to shift from 48:52 to 55:45 to minimize foreign exchange risks.
Refinancing Risks: No more than 15% of debt should mature within one year, with short-term debt capped at 5% of GDP.
Average Maturity: Debt maturity profile extended to a minimum of 10 years.
Foreign Exchange Exposure: FX debt limited to 45% of total debt, down from 51.75%.
Stakeholder Input
The DMO explained that the new framework was developed after consultations with key institutions such as the Ministry of Finance and the Central Bank of Nigeria. The World Bank and IMF also provided technical expertise during the process.
Why It Matters
The government said the strategy would help assure investors, credit rating agencies, and development partners of Nigeria’s commitment to responsible debt management. It builds on the previous MTDS (2020–2023), which emphasized a stronger domestic borrowing profile and concessional external loans.
The DMO noted that by setting clear ceilings and targets, the FG aims to ensure a more predictable, stable, and sustainable debt profile for the country in the coming years.