Key Points
- The IMF warned Nigeria of rising food and transport costs linked to the Middle East conflict, with growth cut to 4.1% in 2026.
- Nigeria’s debt-to-GDP ratio is projected to rise to 33.1% in 2027, coinciding with the general election year.
- Nigerian crude topped $113 per barrel, but analysts warn the windfall may be absorbed by debt servicing rather than reaching citizens.
The International Monetary Fund is telling Nigerians the squeeze on household budgets is not letting up anytime soon, and that the country’s debt is headed in the wrong direction heading into an election year, even as surging crude prices offer a rare bright spot.
Speaking at the IMF-World Bank Spring Meetings in Washington on Wednesday, Abebe Selassie, director of the African Department at the IMF, said the Middle East conflict was already driving up the costs that hit ordinary people hardest: food and transport.
“We are already seeing quite a bit of a pinch from the crisis on people. It is making life difficult for people,” Selassie said. “Transportation costs are very high for people in urban areas, rural areas even more so.”
Reforms must hold, IMF insists
The IMF warned of a deteriorating fiscal outlook globally, noting that conflict in the Middle East could further strain government finances through higher food and fuel prices, tighter financial conditions, lower activity and rising defence outlays.
If the conflict is prolonged, global debt-at-risk could increase by an additional four percentage points.
Selassie urged Nigeria and peer economies to maintain their reform programs rather than reach for short-term fixes.
“What we are pleading is that these interventions are consistent with the medium-term objectives that countries have, and that they’re not thrown off course by this because that would be a double whammy for countries,” he said.
On debt, he pointed to Nigeria’s institutions as an asset. “Nigeria has a fantastic Debt Management Office,” Selassie said, adding that keeping debt manageable relative to debt service capacity was what mattered most, regardless of whether borrowing was domestic or external.
Debt-to-GDP heading up in election year
The IMF’s latest Fiscal Monitor Report projects Nigeria’s debt-to-GDP ratio will increase to 33.1 percent in 2027, a period when Nigerians will head to the polls. The figure is a downward revision from an earlier estimate of 35.3 percent but remains higher than the 32.3 percent expected in 2026.
Total public debt reached N159.27 trillion by the end of the fourth quarter of 2025, a sharp increase of nearly N6 trillion from the previous quarter and a year-on-year rise of N14.6 trillion.
The Tinubu administration is separately seeking legislative approval for fresh external borrowing of about $6 billion.
IMF Director of Fiscal Affairs Rodrigo Valdes warned governments against delay in addressing fiscal pressures. “Too often, the needed consolidation is postponed.
That only ratchets up, squeezing the fiscal space for the next crisis,” he said. He cautioned specifically against broad-based energy subsidies, describing them as “fiscally costly, regressive, and hard to unwind.”
Oil windfall, but no guarantee
Nigerian crude grades are trading well above the 2026 budget benchmark of $60 per barrel. Brass River and Qua Iboe both crossed $113 per barrel, creating the conditions for significant unplanned revenue. Yet analysts warn the money may not translate into relief.
The IMF also downgraded Nigeria’s 2026 growth forecast by 0.3 percentage points to 4.1 percent, noting that war-related higher fuel and fertilizer prices and elevated shipping costs would weigh on non-oil activity. A modest recovery to 4.3 percent is projected for 2027.
Economy analyst Clifford Egbomeade noted the debt ratio alone does not capture Nigeria’s full vulnerability. “Nigeria’s GDP is significantly buoyed by an informal economy that contributes little to government revenue. Debt serviceability, therefore, depends on a narrow formal tax base,” he said, adding that the 2027 timeline coincides with a general election, a period that historically tests fiscal discipline.
David Adonri, executive vice chairman of Highcap Securities Limited, was blunter. “Nigeria is in a debt trap. There may be no benefit from rising crude oil price as the windfall may go into foreign debt servicing or expended on consumption,” he said.