The International Monetary Fund (IMF) has declined to recommend whether Nigeria should prioritise external or domestic borrowing, insisting instead that the country must focus on keeping its overall debt at sustainable levels relative to its repayment capacity.
Abebe Aemro Selassie, Director of the IMF’s African Department, made the position clear on April 16, 2026, during a briefing on the IMF’s Regional Economic Outlook for Sub-Saharan Africa. Responding to a question about Nigeria’s optimal borrowing strategy amid global uncertainty linked to Middle East tensions, Selassie said the decision cannot be reduced to a simple preference for one source over the other.
“What is really important is to keep the level of debt as manageable as possible, relative to debt service capacity,” he stated. He added that effective liability management such as restructuring obligations to extend repayment timelines is equally crucial in easing pressure on public finances.
Selassie expressed strong confidence in Nigeria’s institutional framework, particularly praising the Debt Management Office (DMO). “The DMO is fantastic,” he said. “They understand how to manage these issues.” This expertise, he noted, is why it is difficult to prescribe a one-size-fits-all borrowing path.
The IMF’s neutral stance comes as Nigeria’s total public debt reached N159.28 trillion as of December 31, 2025, with domestic borrowing remaining the dominant component at N84.85 trillion (53.27%). External debt stood at N74.43 trillion, accounting for 46.73% of the total.
In 2025, Nigeria spent $5.21 billion on external debt servicing over 72% of the country’s total international payments highlighting the growing burden of repayment obligations.
The IMF’s position follows a recent appeal by Nigeria’s Finance Minister, Wale Edun, who urged the IMF and World Bank to reduce borrowing costs for developing countries and provide more liquidity tools to ease the strain caused by ongoing global conflicts.
Across sub-Saharan Africa, debt levels continue to rise. S&P Global Ratings estimates that long-term commercial borrowing by sovereigns in the region will reach $155 billion in 2026, up from $140 billion in 2025.
The IMF’s message is clear: while Nigeria and other African nations face mounting financing needs, the priority must remain on prudent debt management, timely liability restructuring, and ensuring that new borrowing does not compromise long-term fiscal sustainability.
As the country prepares its 2026 budget and continues to navigate external shocks, the focus on debt service capacity over the source of borrowing is expected to shape future fiscal and monetary policy decisions.
