Nigeria Faces Rising Debt Pressure as Servicing Costs Could Consume 72% of Revenue by 2030

Nigeria’s public finances could face significant pressure over the coming years, with the Debt Management Office projecting that debt servicing may consume as much as 71.7% of Federal Government revenue by 2030.

The projection raises fresh concerns about the government’s ability to finance essential public services, invest in infrastructure and support long-term economic development.

According to a report published by Punch Newspapers on November 10, 2026, the warning is contained in the Debt Management Office’s 2024 Debt Sustainability Analysis, released on November 9.

The report highlights the growing challenge of balancing government borrowing with the financial resources needed to meet debt obligations.

Debt Servicing Expected to Rise Sharply

The DMO projects that Nigeria’s debt service-to-revenue ratio will rise steadily over the coming years.

Under its baseline scenario, the ratio is projected to increase from 44.9% in 2025 to 51% in 2026.

It is then expected to reach 57.1% in 2027, 57.4% in 2028 and 67.3% in 2029 before climbing to 71.7% in 2030.

The projected figure significantly exceeds the DMO’s recommended debt service-to-revenue threshold of 50%.

This means a growing proportion of government income could be committed to debt repayments, leaving a smaller share available for other public spending priorities.

Economic Risks Could Make the Situation Worse

The Debt Management Office also examined an adverse economic scenario involving currency depreciation, weaker economic growth and reduced government revenue.

Under those conditions, debt servicing could consume approximately 97.3% of Federal Government revenue by 2030.

The stress scenario assumes a 30% exchange-rate depreciation, a 2% decline in real gross domestic product and a 2.5% reduction in revenue.

These figures are projections rather than outcomes that have already occurred.

Nevertheless, they demonstrate how unfavourable economic conditions could increase pressure on Nigeria’s debt obligations.

Nigeria’s Debt-to-GDP Ratio Could Still Improve

Interestingly, the DMO expects Nigeria’s public debt relative to the size of its economy to decline.

Under the baseline scenario, the debt-to-GDP ratio is projected to fall from 53.7% in 2024 to 27.3% by 2030.

However, a lower debt-to-GDP ratio does not necessarily mean debt repayments become easier.

The government’s ability to service its obligations depends heavily on the revenue it collects.

If revenue growth fails to keep pace with repayments, fiscal pressure can increase even when debt becomes smaller relative to GDP.

What This Means for Nigerian Businesses

Higher debt-servicing costs could limit the government’s flexibility to finance infrastructure and other economic development programmes.

Businesses may be affected when essential investments in electricity, transportation and public services receive insufficient funding.

Heavy government borrowing can also compete with private businesses for available financing, potentially influencing interest rates and credit conditions.

For investors, Nigeria’s ability to manage its debt obligations remains an important indicator of fiscal stability and long-term economic confidence.

The Bigger Picture

Nigeria’s debt sustainability challenge highlights the importance of stronger revenue generation, responsible borrowing and efficient public expenditure.

The DMO has recommended measures including improved tax compliance, broader revenue mobilisation and better expenditure management.

While borrowing can support development when funds are invested productively, maintaining manageable repayment obligations is essential.

The coming years will test Nigeria’s ability to strengthen government revenue while ensuring that debt repayments do not undermine economic development.