The International Monetary Fund has declined to endorse a preference for either external or domestic borrowing for Nigeria, stressing that the country’s rising debt profile requires a stronger focus on sustainability and repayment capacity.

Speaking at a media briefing on the Regional Economic Outlook for Sub-Saharan Africa, Abebe Aemro Selassie, Director of the IMF’s African Department, stated that borrowing decisions should be guided by a broader assessment of debt sustainability rather than a fixed financing strategy. His comments come as Nigeria’s total public debt climbed to N159.28tn as of 31 December 2025, according to data from the Debt Management Office, reflecting a continued reliance on both domestic and external financing to bridge fiscal gaps. Selassie noted that the critical issue is not the source of borrowing, but whether debt levels remain manageable relative to the country’s capacity to service obligations without placing undue strain on public finances.

“What is really important is to keep the level of debt as manageable as possible, relative to debt service capacity,” he said, adding that effective liability management, including extending debt maturities, can help ease near-term repayment pressures and improve fiscal stability over time. According to the IMF official, Nigeria possesses the institutional capacity to navigate its debt challenges, citing the technical strength of the DMO.

Nigeria’s debt structure shows a growing domestic component. Domestic debt rose from N81.82tn in September 2025 to N84.85tn in December, while external debt stood at N74.43tn, accounting for 46.73 per cent of total public debt. Despite the tilt towards local borrowing, external obligations continue to exert pressure on foreign exchange; the country spent $5.21bn on external debt servicing in 2025, representing over 72 per cent of total international payments.

Against this backdrop, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has called on multilateral institutions to reduce financing costs and expand access to liquidity for developing economies. Edun noted that lower-cost funding and improved risk management tools are critical to easing debt pressures, particularly as countries contend with rising borrowing costs and constrained access to concessional financing.