Debt service projected to gulp 71.7% of revenue by 2030 – Daily Trust

Nigeria’s debt service-to-revenue ratio is projected to rise to 71.7 per cent by 2030, exceeding the 50 per cent threshold beneficial by the Debt Management Office (DMO).

The projection is contained within the DMO’s 2024 Debt Sustainability Analysis report launched on Monday, which warned that debt servicing would eat an growing proportion of authorities revenue regardless of an anticipated decline within the nation’s debt-to-GDP ratio.

This is coming amidst mounting public debt estimated to hit over N200 trillion by the yr finish whereas home debt servicing within the first six months of 2026 already amounted to 61.4 per cent of the N8.61 trillion spent in the entire of 2025.

It could be recalled that Nigeria spent N8.61 trillion servicing its home debt in 2025, whereas the Federal Government incurred one other N5.28 trillion in home debt-service expenditure within the first six months of 2026, highlighting the persevering with stress of borrowing prices on public funds.

According to the report, the ratio is anticipated to fall from 60.6 per cent in 2024 to 44.9 per cent in 2025 earlier than rising above the beneficial threshold to 51 per cent in 2026.

It is projected to enhance to 57.1 per cent in 2027, 57.4 per cent in 2028 and 67.3 per cent in 2029, earlier than reaching 71.7 per cent in 2030.

Under a extra hostile shock situation, the ratio may climb to 97.3 per cent by 2030, indicating that the majority Federal Government revenue could possibly be absorbed by debt servicing.

The DMO attributed the worsening outlook to debt servicing rising quicker than authorities revenue, highlighting the problem of weak revenue mobilisation.

The shock situation assumes a 30 per cent trade fee depreciation, a two per cent decline in actual Gross Domestic Product and a 2.5 per cent discount in revenue.

Interestingly, the report tasks that Nigeria’s public debt-to-GDP ratio will decline from 53.7 per cent in 2024 to 27.3 per cent by 2030 below the baseline situation.

The report added, “The Total Public Debt -to-GDP ratio is projected to decline from 39.7% in 2024 to 36.9% of GDP in 2025 and additional to 31.3% in 2027 below the Baseline Scenario. The Baseline Scenario assumes improved common actual GDP progress fee of 4.8%, supported by present financial reforms of the Government.

“Under the Schock Scenario, the ratios might be 38.7% in 2027 greater than the ratio within the Baseline Scenario. This ratio would stay inside the beneficial threshold of 60% within the MTDS, 2024-2027 and the 70% MAC-DSA Limit all through the DSA projection interval of 2025 to 2030, below the Baseline and Shock Scenarios.

“Similarly, the Debt Service-to-FGN Revenue ratio can be anticipated to drop from 60.6% in 2024 to 44.9% in 2025, however will exceed the Limit of 50% beneficial within the 2024 DSA ranging from the yr 2026 to 72.6% by 2030 below the Baseline Scenario.

“The rise in this ratio is due to the fact that the rate of growth in Debt Service is higher than the rate of growth of Revenue. This ratio is high and the fiscal space available to the Government is limited. In the Shock Scenario, shortfall in domestic revenue mobilisation would further push the ratio from 57.4% in 2026 to 97.7% in 2030. Thus, fiscal space is further reduced and the ratio needs to be brought down. The two (2) scenarios show a threat to debt sustainability, due to increasing pressure on Government Revenue relative to Debt Service.”

However, the decrease debt ratio doesn’t essentially translate into improved debt affordability, as authorities revenue stays inadequate to comfortably accommodate rising obligations.

The DMO described Nigeria’s debt sustainability as reasonable however extremely weak to weak revenue mobilisation, trade fee depreciation and international uncertainties.

It additionally recognized elevated financing, refinancing and international trade dangers. Nigeria’s common Eurobond unfold stood at 975.58 foundation factors between October 2 and December 31, 2024, above the 600-basis-point threshold.

The company additional famous that non-residents held 49 per cent of Nigeria’s public debt, exceeding the 45 per cent threshold and growing publicity to international trade dangers.

To handle the challenges, the DMO beneficial sustained subsidy removing, a unified and versatile trade fee regime, stronger tax assortment, enlargement of the tax base and improved public expenditure effectivity.

It additionally urged the federal government to prioritise growth-enhancing investments, take into account privatisation of public belongings and rely extra on concessional financing.