The policy, approved by the Federal Executive Council (FEC) and developed with technical assistance from the World Bank and International Monetary Fund (IMF), is designed to balance government financing needs with long-term sustainability while reducing costs and risks.
According to the DMO, the MTDS seeks to optimize Nigeria’s debt portfolio, meet short- to medium-term financing obligations, and deepen the domestic securities market through new financial instruments.
Key Targets of the MTDS (2024–2027):
- Debt Maturity Extension: Average debt maturity will be increased to at least 10 years to ease repayment pressures.
- Foreign Exchange Risk Reduction: Share of foreign exchange-denominated debt will be cut from 51.75% to 45%.
- Debt-to-GDP Ratio: Projected to rise from 52.25% in 2024 to a ceiling of 60% by 2027.
- Interest Payments-to-GDP: Capped at a maximum of 4.5%, compared with 3.75% in 2024.
- Sovereign Guarantees-to-GDP: Limited to 5%, up from 2.09%.
- Domestic-to-External Debt Mix: Adjusted from 48:52 to 55:45, reducing reliance on external borrowings.
- Refinancing Risks: Debt maturing within a year will be capped at 15%, while debt maturing as a share of GDP will not exceed 5%.
The DMO noted that the strategy was developed after extensive consultations with the Central Bank of Nigeria (CBN), the Federal Ministry of Finance, and other stakeholders.
It added that the adoption of the MTDS would boost investor confidence, improve Nigeria’s standing with credit rating agencies, and reassure international partners of the government’s commitment to responsible borrowing.
“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 account cost-risk trade-offs in the debt portfolio, while ensuring debt sustainability and expanding the domestic securities market through innovative products,” the DMO stated.
The new debt framework marks a major shift in Nigeria’s debt management approach as the government faces increasing pressure to stabilize public finances while addressing critical infrastructure and development needs.
