Nigeria: W/Bank forecast Debt-to-GDP to fall below 40%

Nigeria’s economy is showing renewed signs of resilience, with the World Bank projecting a decline in the country’s public debt below 40 per cent of GDP for the first time in over a decade.

The development, outlined in the Bank’s October 2025 Nigeria Development Update (NDU) themed “From Policy to People: Bringing the Reform Gains Home”, highlights steady growth, stronger fiscal discipline, and structural reforms as key drivers of the turnaround.

According to the report, economic growth is expected to rise modestly from 4.2 per cent in 2025 to 4.4 per cent in 2027, supported by strong performance in services, non-oil industries, and agriculture.

Inflation is projected to ease gradually but will remain stubbornly high, underscoring the need for sustained monetary discipline and consistent policy implementation.

The NDU reveals that Nigeria’s economy grew by 3.9 per cent year-on-year in the first half of 2025, compared to 3.5 per cent in the same period of 2024.

The report further notes a strengthening of the country’s external position, with foreign reserves surpassing $42 billion and the current account surplus rising to 6.1 per cent of GDP. This was buoyed by increased non-oil exports and a reduction in oil imports.

“The Nigerian government has taken bold steps to stabilize the economy, and these efforts are beginning to yield results,” said Mathew Verghis, World Bank Country Director for Nigeria.

“But macroeconomic stability alone is not enough. The true measure of success will be how these reforms improve the daily lives of Nigerians—especially the poor and vulnerable.”

Food inflation remains the most significant pressure point, with poor households spending as much as 70 per cent of their income on food. The cost of a basic food basket has increased fivefold between 2019 and 2024.

Samer Matta, the World Bank’s Senior Economist for Nigeria, noted that “inflation is the biggest tax on the poor” and emphasized the need for structural reforms to stabilize prices.

The May 2025 NDU projected Nigeria’s inflation rate to average 22.1 per cent in 2025 as tighter monetary policies by the Central Bank of Nigeria begin to anchor expectations and restore confidence.