The Nigerian Economic Summit Group (NESG) says Nigeria remains exposed to significant debt risks despite improving fiscal indicators.
The group cited weak revenue generation, persistent structural imbalances, and continued dependence on borrowing to finance budget deficits and sustain public spending.
NESG disclosed this in its latest assessment of Nigeria’s public finance outlook, titled ‘Debt Pressure Persists Beneath Surface Stability: DBI Signals Elevated Fiscal Strain in 2025.’
According to the NESG, although some debt metrics improved between 2024 and 2025, Nigeria’s broader fiscal condition remains fragile and vulnerable to persistent debt pressures.
The NESG said Nigeria’s Debt Burden Index (DBI) – a broader measure used to assess debt stress beyond conventional debt ratios – declined to 70.9 points in 2024 from 83.6 points recorded in 2023.
However, the group cautioned that the decline should not be interpreted as evidence of meaningful improvement in the country’s fiscal health.
NESG projected the DBI to rise to 78.4 points in Q1 2025 and 79.6 points in Q2 2025.
The index was estimated at 76.2 points in Q3 before rebounding to 79.2 points in Q4 2025.
According to the NESG, the decline was largely driven by a temporary moderation in debt-servicing pressures rather than stronger fiscal capacity, improved revenue mobilisation, or structural reforms.
‘Overall, the 2024-2025 transition does not yet reflect a decisive shift toward debt sustainability. Rather, it signals a system making only marginal adjustments, with improvements in headline ratios masking persistent structural imbalances,’ the report stated.
The group added that the rising debt-to-GDP ratio reflects Nigeria’s continued reliance on borrowing to finance persistent fiscal deficits.
The NESG noted that structural weaknesses such as poor revenue mobilisation, weak tax efficiency, rising recurrent expenditure, exchange-rate pressures, subsidy reforms, and inflation-related spending demands continue to weaken the country’s fiscal position.
The group stressed that the divergence between a declining DBI and a rising debt-to-GDP ratio highlights deeper fiscal vulnerabilities within the economy.
‘The 2025 DBI trajectory reinforces concerns. Quarterly estimates show that the DBI remains elevated and volatile, rising to 78.4 points in Q1 and peaking at 79.6 points in Q2, before moderating to 76.2 points in Q3 and closing the year at an estimated 79.2 points in Q4,’ the report noted.
The group added that unless significant reforms are implemented to strengthen revenue generation and reduce fiscal leakages, the country’s debt burden could continue to pose risks to long-term economic growth.