FG has approved Nigeria’s Medium-Term Debt Management Strategy for 2024–2027.
NewsOnline Nigeria reports that the Federal Government has formally approved Nigeria’s Medium-Term Debt Management Strategy (MTDS) for 2024–2027, a move aimed at ensuring debt sustainability, strengthening fiscal stability, and boosting the domestic securities market.
The Debt Management Office (DMO) announced the approval in a press release on Saturday, following the endorsement of the framework by the Federal Executive Council (FEC). The MTDS was developed with technical guidance from the World Bank and the International Monetary Fund (IMF), and is widely regarded as a global best practice in public debt management.
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According to the DMO, the strategy is designed to balance the government’s financing requirements with debt sustainability considerations while minimizing borrowing costs and associated risks.
“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 an optimal 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 said.
New Debt Targets Set
Under the new strategy, Nigeria has established fresh benchmarks for debt sustainability across key fiscal and risk indicators:
Debt-to-GDP ratio: Expected to rise from 52.25% in 2024 to a ceiling of 60% by 2027.
Interest payments-to-GDP: Capped at 4.5%, up from 3.75% in 2024.
Sovereign guarantees-to-GDP: Should not exceed 5%, up from the current 2.09%.
Domestic-to-external debt mix: Adjusted from 48:52 to 55:45 to reduce foreign exchange risk.
Refinancing risk: Limited to 15% of debt maturing within a year, with total debt maturing capped at 5% of GDP.
Average maturity: Minimum of 10 years to ensure longer repayment cycles.
Foreign exchange debt exposure: Reduced to 45% of total debt, down from 51.75%.
The DMO emphasized that the MTDS was formulated through extensive consultations with key stakeholders in the monetary and fiscal space, including the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance, with technical input from the World Bank and IMF to ensure compliance with international standards.
Implications for Investors
The strategy is expected to reinforce investor confidence and reassure credit rating agencies and international partners that Nigeria remains committed to responsible debt management and fiscal discipline.
This latest MTDS follows the 2020–2023 framework, which marked a shift toward more domestic-focused debt management. The MTDS, developed under the guidance of the World Bank and IMF, provides a structured approach to government debt operations, helping authorities make informed financing decisions while mitigating risks.
