Rising Debt: IMF Urges Nigerian Government to Boost Revenue and Cut Waste
The International Monetary Fund (IMF) has urged the Federal Government of Nigeria to aggressively increase revenue generation, eliminate distortions in the tax system and redirect public spending towards sectors that promote growth, as the country continues to struggle with rising debt and high debt-servicing costs.
The recommendations were made by Rodrigo Valdés, Director of the IMF’s Fiscal Affairs Department, and Davide Furceri, Division Chief in the same department, during a press briefing on the Fund’s Fiscal Monitor October 2026 report at the ongoing IMF/World Bank Annual Meetings in Bangkok, Thailand.
Nigeria’s Debt Situation
Despite a significant rise in government revenue following tax reforms and the removal of fuel subsidy, Nigeria’s public debt has continued to climb. Total public debt rose by 71 per cent to ₦166.788 trillion at the end of June 2026 from ₦97.34 trillion at the end of 2023.
During the same period, statutory allocation to the three tiers of government increased by 112 per cent to ₦23.15 trillion in 2025 from ₦10.9 trillion in 2023.
Key IMF Recommendations
The IMF advised Nigeria and other countries with relatively low tax bases to mobilise more revenue for two main reasons: to meet rising interest payments and to fund investments that support long-term economic growth.
Valdés cautioned against a one-size-fits-all approach to fiscal consolidation. The Fund also supported the use of targeted transport subsidies to protect vulnerable citizens from rising fuel costs, warning that blanket subsidies are costly and less effective.
Furceri specifically cited Nigeria as an example of a country that needs to generate enough revenue both to service its debt and to finance productive investments.
Why This Matters
Nigeria’s debt-servicing burden remains heavy. Recent data from the World Bank showed that in the first half of 2026 alone, the Federal Government spent ₦7.7 trillion on interest payments — more than its total revenue of ₦6.2 trillion for the same period.
The IMF’s latest advice reinforces the need for the government to not only collect more revenue but also spend more efficiently. Without stronger revenue mobilisation and better control of wasteful spending, a large share of public funds will continue to go into debt servicing instead of infrastructure, education, healthcare and other critical areas.
Sources:
IMF Fiscal Monitor October 2026 press briefing, Bangkok; reports from Vanguard, The Eagle Online and related national media, October 14, 2026.
