IMF Allays Fears, Says Nigeria’s Public Debt Not High Risk

•Hails CBN’s tight monetary policy stance

•Advises govts to intensify domestic revenue mobilisation

•Prescribes targeted social interventions

•FG announces historic 6,003MW peak power generation

•Reiterates need for cost-reflective electricity tariffs

Obinna Chima in Lagos and Ndubuisi Francis, Emmanuel Addeh in Abuja
International Monetary Fund (IMF) allayed fears that the country was on the verge of sliding into a debt trap, saying Nigeria’s debt level is “moderate and not high risk”. IMF’s First Deputy Managing Director, Gita Gopinath, said this during an exclusive interview with THISDAY in Lagos.
During a meeting with Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, in his office in Abuja, Gopinath acknowledged the economic challenges currently facing Nigeria. He underscored the need for the federal government to embrace targeted social interventions.

In another development, the federal government announced the achievement of 6,003 megawatts (mw) peak power generation, the highest electricity generation ever recorded in the country.
Nigeria’s total public debt had risen to N142.3 trillion as of September 30, 2024, compared to N134.3 trillion in June 2024. The rise in the country’s debt level (external and domestic) was as a result of the exchange rate devaluation.

Data from the Debt Management Office had shown that external debt in dollar terms increased marginally from $42.90 billion in June to $43.03 billion in September in naira terms, while external debt rose by 9.22 per cent, from N63.07 trillion to N68.89 trillion in the comparable period.
A “moderate debt level” means a level of debt considered manageable and sustainable, where the amount of debt owed by a country is not so high that it significantly impacts its ability to meet its financial obligations while still allowing for some flexibility in spending.

Responding to a question on how sustainable the country’s debt level was, Gopinath said, “We (IMF) assess debt sustainability for countries every year and we did this for Nigeria in our report for 2024. Our assessment was that the risk of sovereign stress for Nigeria is moderate and not high risk.”

When asked if at moderate debt level, it meant the country had enough room to take more debts, Gopinath said, “No, I will not go that path.”
According to her, “The point is that you want to stay moderate and you don’t want to move into a high risk debt level.

“But I just want to highlight the fact that while the country’s sovereign debt is said to be moderate, we are living in a world with a lot of shocks and large amount of uncertainty.

“And if you look at the interest payment as a share of revenues, that is 75 per cent of revenues go into interest payment. That means there is hardly any money for doing social support or development spending.
“Therefore, to make sure that debt stays in a manageable level, it is also important to do more domestic revenue mobilisation, which is to be able to raise more revenue.

“That is going to be very helpful in meeting other needs of the society. Also, all other macro-adjustments that are necessary to bring down inflation would over time help in reducing interest payment. So, Nigeria’s debt is a moderate risk, but it is important to stay the course in terms of sound policies and also pro-growth policies because that is very helpful from a debt perspective.”

Commenting on the multilateral institution’s recommendations for Nigeria to ramp up domestic revenue, IMF official pointed out that the significant savings from ending fuel subsidies should be re-channelled into the government’s coffers so that it could be used for important development spending. This, Gopinath stated, would raise revenues for the government.

Gopinath said, “The second step, of course, is in terms of improving administration. More can be done on that front and the government needs to invest in automation and digitalisation to make that happen.

There also tend to be a lot of tax exemptions – what we call tax expenditures. Closing those loopholes would also help to raise tax revenues. “More generally, putting policies in place, like improving security, power, infrastructure, ease of doing business, which the government has done with the recent national single window to help importers and importers.

“Those kinds of measures would bring back investment and growth and that would also be helpful.”

For the Central Bank of Nigeria (CBN) to keep the naira exchange rate stable, Gopinath advised the monetary policymakers to keep monetary policy tight. She said this was necessary to help bring inflation down and stabilise the naira exchange rate.

He stated, “The central bank has also done a good job in terms of fixing the forex market and functioning of the market to prevent big and unnecessary volatile moves.

“So, making sure that the forex market continues to work efficiently is going to be important. It is not just about monetary policy; it also depends on fiscal policy.

“Fiscal policy also needs to be in line with bringing inflation down. Containing deficits is going to be important and making sure that you don’t go back to when central banks were financing fiscal deficits because that obviously would be detrimental to the naira.

“So, these set of measures, staying the pack and letting the currency be a shock absorber and not doing too much interventions, are very important to keep confidence in the currency.”

On how long the tight monetary policy regime should last, considering complaints from members of the organised private sector, the IMF deputy managing director said, “We align with the policies of the central bank in terms of keeping interest rate high. It is going to be important to bring interest rate down. I think they are going to benefit from the fact that food inflation is expected to soften.

“And through that channel, you will get a decline in inflation and that is going to help in terms of monetary policy and bring overall inflation down.

“Again, it is important to stay the course, it takes time to bring inflation down from high levels and so it is important to stay the course and make sure that inflation comes down considerably.

“We have had many episodes of countries where you declare success prematurely and you end up with another bout of very high inflation. Nobody wants that to happen.”

Gopinath acknowledged the economic challenges currently facing Nigeria and highlighted the need for the federal government to embrace targeted social interventions. She prescribed this when she met Edun on Tuesday in Abuja.

The finance ministry’s Director of Information and Public Relations, Mohammed Manga, disclosed in a statement that Gopinath acknowledged the economic challenges facing Nigeria and emphasised the importance of targeted social interventions.

“We discussed Nigeria’s outlook and efforts to address the high cost of living, including the need to accelerate social support,” she was quoted as saying, reaffirming the IMF’s commitment to supporting sustainable economic policies.

The high-level discussion with Edun focused on economic reforms, private sector investment, and Nigeria’s engagement in global financial affairs.

The finance minister outlined Nigeria’s effort to enhance social investment programmes, stating that the government is transitioning to a biometric-based transparent system to improve efficiency and accountability.

He stated that the government was also advancing tax reforms, revenue assurance mechanisms, and digitalisation to strengthen domestic resource mobilisation.

Additionally, he said crude oil production had increased from 1.2 million to 1.7–1.8 million barrels per day, significantly boosting national revenue.

Highlighting the role of private sector investment, the minister emphasised policy shifts aimed at expanding renewable energy, improving the investment climate for solar, and promoting service exports.

Edun also addressed electricity sector reforms, and advocated expanded metering to enhance efficiency.

On the international front, discussions focused on Nigeria’s participation in global financial policy and efforts to secure fairer and improved credit ratings for African economies.

Edun stressed that enhancing fiscal data transparency could strengthen Nigeria’s credit profile, attract investors, and reduce borrowing costs.
Meanwhile, the federal government yesterday announced what it termed a significant step forward in the country’s quest for sustainable and reliable electricity supply, with the achievement of 6,003mw, the highest generation ever recorded in the country.

According to a statement by Bolaji Tunji, the Special Adviser on Strategic Communication to the Minister of Power, Chief Adebayo Adelabu, on March 2, 2025, Nigeria achieved a record available power generation of 6,003mw, the highest in the nation’s history.

He said this was followed by another landmark within the period, when the country recorded a peak generation evacuation of 5,801.84 MW and a daily maximum energy output of 128,370.75 megawatt-hours
“These achievements represent a significant leap forward in the sector’s capacity to meet the growing energy demands in the country, ongoing reforms in the power sector and the avowed commitment of the administration of President Bola Tinubu to ensure regular electricity supply in order to galvanise the nation’s economy,” the federal government said.

The statement expressed optimism on the sustainability of the “records” and the potential for further improvements in the coming days.

It said, “We are thrilled to announce these historic milestones in Nigeria’s power sector. The record available generation of 6,003mw, the peak evacuation of 5,801.84mw, and the daily maximum energy output of 128,370.75 MWh are testaments to the hard work, dedication, and strategic reforms being implemented under the leadership of the Minister of Power, Adelabu.

“These achievements are not just numbers; they represent a brighter future for Nigeria, where businesses can thrive, households can enjoy uninterrupted power supply, and the economy can grow sustainably.”
The statement also said the recent milestones were the result of concerted efforts by the Federal Ministry of Power, in collaboration with key stakeholders in the sector, to address longstanding challenges and optimise the nation’s power infrastructure.

“These efforts include the rehabilitation and upgrading of transmission and distribution networks, the implementation of innovative technologies, and the introduction of policy reforms aimed at enhancing efficiency and accountability,” the statement said.

The federal government said one of the key factors that contributed to the recent achievements was the tariff review, which ensured liquidity in the sector and created a more sustainable and investment-friendly environment for the power sector.

The statement added, “By ensuring that tariffs reflect the true cost of power generation and distribution, the government is paving the way for increased private sector participation and the mobilisation of much-needed capital for infrastructure development.”

According to Adelabu, the regularisation of tariffs will play a critical role in unlocking the sector’s full potential and driving further improvements in power generation and distribution.

To sustain the improvements, the government would have to pay down on the tariff shortfalls of N1.94 trillion for 2024 and legacy debts of N2 trillion to the Generation Companies (GENCOs), the government said.
Adelabu said, “It would be important to continue the tariff reforms to ensure consumers start to pay for the energy consumed. By the time the tariffs are fully regularised, we will be moving closer to 7,000 MW of available generation capacity.

“This will mark another significant milestone in our journey towards a stable, reliable, and efficient power sector that meets the needs of all Nigerians.”

He admitted that there was still much work to be done, stating that Nigeria cannot afford to rest on its laurels.

The minister said, “The support and cooperation of all stakeholders are critical to sustaining these achievements and driving further progress in the sector. Together, we can build a power sector that serves as a catalyst for Nigeria’s economic growth and development.”
Adelabu inaugurated the planning committee on the proposed conference of the National Council on Power (NACOP), the highest decision making body for the power sector.
He charged members of the committee to ensure a successful and hitch-free event.

The event is scheduled for the second quarter of this year.
The minister underscored the importance of the conference, stressing that the council meeting has become more important against the background of the ongoing reforms and revitalisation of the power sector.

Adelabu stated, “As we are all aware, this is the highest decision making body for the power sector, so we have an important assignment at hand and not just a meeting. It must be planned and executed to ensure that the desired outcome of the meeting is achieved.

“The last of this meeting, I understand, was held in December 2022, so we have a lot of grounds to cover because it is supposed to be an annual meeting. We have a backlog of issues to discuss at the coming meeting and we must be fully prepared for it.”