Nigeria’s fiscal consolidation efforts face a “fragile” future as experts warn that the upcoming 2026–2027 election cycle could trigger a massive surge in government spending, potentially undermining recent debt management gains.
According to the latest Coronation Economic Note on the Q4 2025 Debt Report, the nation’s total public debt has hit a record N159.28tn. While the government’s debt-to-GDP ratio appears healthy on paper, the report highlights a “critical paradox” in Nigeria’s ability to actually pay what it owes.
“Nigeria’s fiscal consolidation story is in reality still aspirational, as it is fragile in execution,” the report states, noting that any pre-election spending uptick represents a major risk variable for the 2026–2027 period.
The most alarming finding in the report is the debt-service-to-revenue ratio, which reached an estimated 113 per cent in early 2025. This indicates that the Federal Government is spending more on interest and debt repayments than it generates in total revenue.
“A government spending more on debt servicing than it earns in total revenue is not servicing debt from cash flow, it is rolling obligations forward, creating a self reinforcing borrowing cycle,” it added.
Despite an N109tn expansion in debt over the last three years, the report suggests that the government is essentially staying afloat by borrowing to pay back previous loans.