The Federal Government has given approval to a new Medium-Term Debt Management Strategy (MTDS) for 2024–2027, aimed at ensuring Nigeria’s debt profile remains sustainable while boosting fiscal stability and strengthening the domestic capital market.
The framework, designed with input from the World Bank and International Monetary Fund (IMF), was endorsed by the Federal Executive Council (FEC) and confirmed in a statement released by the Debt Management Office (DMO).
According to the DMO, the strategy seeks to strike a balance between meeting the government’s borrowing needs and maintaining fiscal responsibility. “The key objectives of the MTDS are to meet the Government’s financing needs and payment obligations in the short to medium term, taking into consideration the costs and risks trade-offs in the debt portfolio; to achieve optimum composition of the public debt portfolio that ensures debt sustainability; and to further deepen the domestic securities market through the introduction of new products,” the statement read.
Key Debt Benchmarks
The plan introduces new limits to guide borrowing and manage risks:
- Debt-to-GDP ratio is projected to increase from 52.25% in 2024 to a maximum of 60% by 2027.
- Interest payments-to-GDP will be capped at 4.5%, slightly above the 2024 figure of 3.75%.
- Sovereign guarantees must not exceed 5% of GDP, compared to the current 2.09%.
- The debt mix will shift to 55% domestic and 45% external, reducing exposure to foreign exchange volatility.
- Refinancing risks will be limited, with only 15% of debt maturing within a year.
- Average debt maturity will be extended to at least 10 years.
- FX-denominated debt will be cut down to 45% of total debt from the current 51.75%.
The DMO explained that the framework was developed in collaboration with key stakeholders such as the Central Bank of Nigeria (CBN) and the Ministry of Finance, with technical guidance from international partners.
The government believes the new strategy will reassure investors, lenders, and rating agencies of Nigeria’s commitment to responsible debt management.