Nigeria’s public debt to rise moderately to 34.68% of GDP by 2026 — CBN

Nigeria’s public debt is projected to climb to 34.68 per cent of Gross Domestic Product (GDP) by the end of 2026, but the trajectory is expected to remain sustainable, supported by improved exchange rate stability and stronger fiscal fundamentals, the Central Bank of Nigeria (CBN) has said.

The projection is contained in the CBN’s 2026 Macroeconomic Outlook for Nigeria, which shows a marginal increase from the 33.98 per cent public debt-to-GDP ratio recorded at the end of June 2025.

According to the apex bank, the rise reflects anticipated new borrowings under ongoing discretionary fiscal policy actions.

Despite the expected increase, the CBN maintained that Nigeria’s debt outlook remains stable, noting that the key factors driving debt accumulation in recent years—especially exchange rate-related valuation effects—are likely to weaken significantly in 2026.

“The public debt is anticipated to remain on a sustainable path in 2026. It is projected at 34.68 per cent of GDP by end-2026 compared with 33.98 per cent at end-June 2025,” the apex bank stated.

The CBN explained that between 2023 and 2025, sharp movements in the exchange rate were the dominant contributors to the growth of public debt, as the depreciation of the naira inflated the local currency value of Nigeria’s foreign-denominated obligations. However, this trend is expected to taper in 2026 due to improved exchange rate stability.

According to the bank, the revaluation effect on public debt—which had significantly driven debt growth in recent years—is projected to narrow considerably in 2026, reducing the impact of valuation losses on the overall debt stock.

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“With these valuation losses easing, debt growth will rely less on one-off adjustments and more on traditional factors like the primary balance, supported by the Tax Act of 2025 and real economic growth,” the CBN noted.

The CBN added that sustained exchange rate stability, improved revenue mobilisation and stronger growth could enhance the country’s debt service capacity, lower borrowing costs and strengthen investor confidence in Nigeria’s medium-term debt sustainability.

Meanwhile, the World Bank has also expressed optimism about Nigeria’s debt position. In its October 2025 Nigeria Development Update (NDU) titled “From Policy to People: Bringing the Reform Gains Home,” the Bretton Woods institution projected that Nigeria’s public debt would fall below 40 percent of GDP for the first time in over a decade.

The World Bank further forecast that Nigeria’s economic growth would rise modestly from 4.2 per cent in 2025 to 4.4 per cent by 2027, reinforcing expectations of a gradually improving macroeconomic environment anchored on reforms and fiscal discipline.