The World Bank has projected that Nigeria’s share of debt as a percentage of its gross domestic product (GDP) will drop to 39.8 per cent in 2025.
If this happens, it will be the first time in more than a decade, helped by stronger growth and a more stable exchange.
The World Bank said this in its Nigeria Development Update report titled ‘From Policy to People: Bringing the Reform Gains Home’, released on Wednesday.
The report read: “The debt-to-GDP ratio is projected to decline from 49.2 percent in 2024 to 39.8 percent in 2025, the first decline in more than a decade; and the debt service to revenue dropped significantly to levels not seen in many years. Fiscal resilience, stronger growth, and exchange rate appreciation have helped ease debt pressures.”
Nigeria’s total public debt grew by N27.72 trillion to N149.39 trillion as at first quarter of 2025, largely due to a weak naira that’s continued to balloon the country’s external obligations.
However, a stronger growth that rose to its highest in five years in the second quarter to 4.23 per cent and a naira that’s been stable all through the year is expected to reduce debt burden.
The bank stated, “The country’s external position has strengthened, with foreign reserves exceeding $42 billion and the current account surplus rising to 6.1% of GDP, supported by higher non-oil exports and lower oil imports.
“On the fiscal side, despite lower oil prices, the federal deficit is projected at 2.6% of GDP in 2025, broadly unchanged from 2024, while public debt is expected to decline for the first time in over a decade—from 42.9 to 39.8% of GDP.”
The Bank’s Senior Economist for Nigeria, Samer Matta, noted that inflation is expected to gradually ease but remain elevated, requiring sustained monetary discipline and structural reforms to tackle food prices—the “biggest tax on the poor.”
On his part, Country Director for Nigeria, Mathew Verghis, said: “The Nigerian government has taken bold steps to stabilize the economy, and these efforts are beginning to yield results. But macroeconomic stability alone is not enough. The true measure of success will be how these reforms improve the daily lives of Nigerians—especially the poor and vulnerable.”
The report, however, pointed out that the macroeconomic gains have yet to translate into tangible improvements in people’s lives, as many households continue to face hardship, with poverty and food insecurity remaining high.
Food inflation, according to the report, remains a major concern: poor households—who spend up to 70% of their income on food—have seen the cost of a basic food basket rise fivefold between 2019 and 2024.
According to the World Bank, while current reforms are addressing long-standing policy distortions, sustained progress in livelihoods will depend on continued efforts to reduce inflation, foster inclusive growth, strengthen public services, and expand support for the most vulnerable.
