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•Says Africa’s recovery at risk as new global shocks hit stabilisation gains
From Uche Usim, Washington DC
From the International Monetary Fund (IMF) comes a clear warning to Nigeria and others within the Sub-Saharan bloc to keep sovereign debt at manageable levels to avoid being boxed into a debt trap.
Nigeria’s public debt climbed sharply to N159.27 trillion by the end of 2025, a development that highlights mounting fiscal pressures as government borrowing accelerates across federal and subnational levels.
New figures released by the Debt Management Office (DMO) on Tuesday show the debt stock rose by N5.98 trillion from N153.29 trillion recorded at the end of the third quarter of 2025. On a year-on-year basis, the increase is more pronounced, with the total debt expanding by N14.6 trillion from N144.67 trillion in the same period of 2024.
Speaking at the Regional Economic Outlook for Sub-Saharan Africa briefing on the sidelines of the IMF–World Bank Spring Meetings in Washington DC, the Director of the IMF’s African Department,
Abebe Selassie, addressed growing questions around debt sustainability and external borrowing space, emphasising that debt strategy must be assessed holistically rather than through a narrow lens of domestic versus external borrowing.
He said the key priority is ensuring that debt levels remain manageable relative to a country’s capacity to service obligations, while also improving the structure of liabilities.
He added that governments must carefully consider maturity profiles, refinancing risks and overall debt composition when designing borrowing strategies.
“Whether to borrow externally or domestically depends on time and context,” Selassie said, adding that liability management operations remain critical tools for smoothing repayment schedules and reducing rollover risks.
He stressed that financing terms, including tenure, cost and disbursement speed, are increasingly important in today’s volatile environment, where delays can significantly heighten economic stress.
He also acknowledged that time has become a critical factor in stabilisation efforts, particularly for countries facing urgent financing gaps.
“We are looking at the terms of financing, the tenure, and how quickly support can be deployed,” Selassie said.
He added that the Fund is working to expand the use of existing instruments while rolling out additional medium-term support programmes.
He said that in moments of global uncertainty, the IMF often becomes a key source of emergency financing and policy coordination for affected countries.
“We are geared up and having discussions to see how we can support countries as quickly as possible,” he said.
The IMF noted that as external risks intensify, Africa’s recovery is real, but fragile.
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It added that its durability will depend on disciplined policy choices at home and timely international support.
Other officials at the briefing warned that Africa’s recent economic stabilisation gains are coming under renewed pressure from fresh global shocks, even as countries like Nigeria begin to benefit from difficult but necessary reforms.
They noted that 2025 marked a turning point for the region.
They described it as a year of “hard-won stabilisation gains,” driven by exchange rate realignments, subsidy reforms and tighter monetary policy frameworks that helped restore macroeconomic balance in several economies after years of instability.
Countries such as Nigeria, they noted, were among those beginning to see early benefits from these adjustments.
But they cautioned that the progress is now facing serious headwinds.
“As we enter 2026, these gains are under pressure,” they said, pointing to a new wave of external shocks that could undermine fragile recoveries if not carefully managed.
A key disruptor is escalating geopolitical tension in the Middle East, which has triggered sharp increases in global commodity prices.
IMF noted that oil, gas and fertiliser costs have surged, placing immediate strain on import-dependent economies across Sub-Saharan Africa.
The shock, they noted, is not limited to commodities as shipping costs have equally risen.
More so, trade flows with Gulf partners have been disrupted and tourism and service earnings are beginning to weaken.
The Fund noted that at the same time, tighter global financial conditions are increasing borrowing costs, especially for fuel-importing countries already stretched by fiscal pressures.
They warned that the region’s recent gains must be actively defended.
“These gains are definitely worth defending and the policy choices being made now will determine the extent to which they are preserved,” they said.
They stressed that the IMF stands ready to support countries through financing and policy engagement.
The IMF confirmed that discussions are ongoing with several African governments on how to navigate the evolving external environment, balancing short-term stabilisation with medium-term reform needs.
