NESG Warns of Persistent Debt Risks As Public Debt-to-GDP Hits 40.6%

The Nigerian Economic Summit Group (NESG) has raised alarm over Nigeria’s escalating debt burden, cautioning that the country faces persistent risks despite superficial signs of fiscal stabilisation.

In its latest debt monitoring report, the policy advocacy group highlighted that Nigeria’s public debt-to-GDP ratio surged to 40.6 per cent in 2024, underscoring ongoing reliance on borrowing to cover fiscal deficits amid weak revenue mobilisation.

The NESG noted that while Nigeria’s Debt Burden Index (DBI) improved marginally to 70.9 points in 2024 from a 2023 peak of 83.6 points, this easing masks deeper vulnerabilities.

“The improvement was largely driven by a moderation in debt servicing pressures rather than any substantial strengthening in the country’s fiscal position,” the report stated.

It pointed to a stark divergence: a declining DBI alongside a rising debt-to-GDP ratio, revealing the fragility of Nigeria’s fiscal health.

“The underlying fiscal vulnerability remained significant,” the NESG emphasised.

The NESG noted that while the reduction could suggest easing debt stress on the surface, the improvement was largely driven by a moderation in debt servicing pressures rather than any substantial strengthening in the country’s fiscal position.

The group stated that Nigeria’s public debt-to-GDP ratio rose sharply to 40.6 per cent in 2024, reflecting continued dependence on borrowing to finance fiscal deficits amid weak revenue generation.

It explained that the divergence between the declining DBI and rising debt-to-GDP ratio underscores the fragility of the country’s fiscal condition.

“The underlying fiscal vulnerability remained significant,” the report stated.

The NESG further warned that debt pressure is expected to remain high throughout 2025, based on quarterly projections of the Debt Burden Index.

According to the report, the DBI is projected to rise to 78.4 points in the first quarter of 2025 before peaking at 79.6 points in the second quarter.

Although the index is expected to moderate slightly to 76.2 points in the third quarter, it is projected to rise again to 79.2 points by the fourth quarter of the year.

The organisation said the pattern suggests that debt pressure has not structurally eased but continues to fluctuate within what it described as a “high-stress band.”

The NESG stressed that the transition from 2024 to 2025 does not yet indicate a decisive move toward debt sustainability.

Rather, it said the current fiscal situation reflects a system making only limited adjustments, while improvements in headline debt indicators continue to mask deeper structural imbalances in public finance management.

The report added that the Debt Burden Index offers a more realistic picture of Nigeria’s fiscal health than conventional debt indicators, warning that the country remains in a high-risk fiscal environment despite signs of apparent stabilisation.

The NESG has repeatedly called for stronger fiscal reforms, improved revenue mobilisation, and more prudent debt management to reduce pressure on public finances and strengthen economic resilience.

Looking ahead, the group projected sustained high debt pressures through 2025. The DBI is expected to climb to 78.4 points in the first quarter, peak at 79.6 points in the second quarter, ease slightly to 76.2 points in the third, and rise again to 79.2 points by year-end.

This fluctuating pattern, the NESG said, indicates debt stress persisting within a “high-stress band” without structural relief. The transition from 2024 to 2025 does not signal a move toward debt sustainability but rather limited adjustments that obscure imbalances in public finance management.

The report positioned the DBI as a more reliable gauge of fiscal health than traditional metrics, affirming Nigeria remains in a high-risk environment.

To address these issues, the NESG reiterated calls for robust fiscal reforms, enhanced revenue generation, and prudent debt management to bolster economic resilience.