The Federal Government has released a new debt management plan that places Nigeria’s maximum borrowing threshold at 60% of Gross Domestic Product (GDP) by 2027.
The Debt Management Office (DMO) explained that the Medium-Term Debt Management Strategy (MTDS) for 2024–2027 is designed to guide how the government meets its funding needs while keeping public debt sustainable.
The plan considers both cost and risk, aims to improve the structure of Nigeria’s debt portfolio, and seeks to further deepen the local debt market through fresh financial products.
“In furtherance of the adoption of international debt practices, Nigeria’s Medium-Term Debt Management Strategy (MTDS) for 2024 – 2027 has been approved by the Federal Executive Council.
“In preparing the MTDS, the Debt Management Office (DMO) collaborated with other stakeholders in the monetary and fiscal space. The DMO also received technical support from the World Bank and the IMF,” the agency said.
According to the DMO, the framework was developed with input from key players in fiscal and monetary policy and benefited from technical assistance provided by the World Bank and the International Monetary Fund (IMF). The Federal Executive Council has already given its approval.
A major highlight of the strategy is the shift towards more borrowing within the country. The portfolio mix has been set at 55% domestic debt and 45% external debt, a move aimed at reducing exposure to exchange rate volatility.
In addition, debt service payments are expected to remain below 4.5% of GDP, so that repayments do not swallow a large share of government revenue.
The plan also places restrictions on short-term foreign borrowing. Such loans must not exceed 10% of Nigeria’s external reserves, while the government will steer clear of loans that require quick repayment in order to avoid pressure on public finances.
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