The International Monetary Fund has given Nigeria’s overall debt structure a clean bill of health while simultaneously delivering one of its most pointed warnings about the country’s fiscal condition, saying that the federal government was spending approximately half of all tax revenue collected on interest payments alone, a burden that was crowding out investment in every other area of public life from education and healthcare to security and social protection.
IMF Resident Representative for Nigeria Dr. Christian Ebeke, speaking during an ARISE NEWS interview on the fund’s recently concluded Article IV Consultation, said Nigeria’s debt-to-GDP ratio in the mid-30 percent range compared favorably with peer countries and that the composition of the debt portfolio provided additional structural comfort. A reasonable balance between domestic and foreign borrowings, predominantly long-term maturities, and a significant proportion of concessional loans rather than expensive commercial debt all contributed to a moderate sovereign stress risk assessment that the fund said did not classify Nigeria as a high-risk debt-distressed country.
However, Ebeke was direct about the severity of the interest-to-revenue problem, estimating that between 2025 and 2028, approximately 50 percent of federal tax revenue was being consumed by debt service obligations, leaving barely half of what the government collected available for everything else it was constitutionally required to provide. He said this structural imbalance was the primary reason the IMF had been emphasizing domestic revenue mobilization with such urgency, saying the new tax laws needed to be implemented fully and enforced rigorously, and that the realities of high inflation, widespread poverty, and acute food insecurity had to be factored into how revenue expansion was approached.
On the $5 billion total return swap arrangement with First Abu Dhabi Bank, Ebeke said the deal’s core parameters remained largely opaque even to well-informed observers and that the fund had serious reservations about its transparency, complexity, and the potential risks it could expose Nigeria to under adverse market conditions. He said Nigeria had been required to pledge domestic bonds worth 133 percent of the deal value as over-collateralization, making the arrangement more expensive than alternatives the country had direct access to, and that nations historically resorting to such instruments typically did so because they lacked access to international capital markets, a condition he said did not apply to Nigeria which retained the ability to issue Eurobonds without posting collateral.
The IMF also renewed its warning about deepening poverty, citing World Bank estimates placing Nigeria’s poverty rate at 63 percent at the end of 2025 and calling for social protection programs including cash transfers to become permanent features of public expenditure rather than time-limited interventions. Ebeke said any future expansion of the tax base needed to be accompanied by visible improvements in public services, arguing that the social contract required for voluntary compliance depended on citizens being able to see that their taxes delivered tangible benefits.
