2026: CBN projects 34.6% debt-to-GDP amidst more borrowings

From Abdullateef Aliyu, Dotun Omisakin (Lagos) & Philip Shimnom Clement (Abuja)

The Central Bank of Nigeria (CBN) has projected a debt-to-GDP ratio of 34 per cent, while foreign reserves are expected to rise to $51 billion.

The apex bank, in its 2026 macroeconomic outlook report, said fiscal projections for 2026 remain optimistic, with retained revenue and expenditure projected at N35.51 trillion and N47.64 trillion, respectively, resulting in a provisional deficit of N12.14 trillion, or 3.01 per cent of GDP.

“Public debt as a percentage of GDP is projected at 34.68 per cent by end-2026, compared with 33.98 per cent as at June 2025, predicated on expected new borrowings,” the report added.

Daily Trust reports that the debt-to-GDP ratio compares a country’s total government debt to its Gross Domestic Product (GDP), showing its ability to pay debts relative to its economic output.

Nigeria’s rising public debt has raised concerns in recent times, amidst plans to borrow more in the 2026 fiscal year.

Nigeria’s debt rose to N152.39 trillion (USD99.66 billion) as of June 2025 and may exceed N160 trillion by year-end.

The Northern Elders Forum (NEF) had on Monday called on Nigerians to speak out against what it described as reckless and unsustainable borrowing by the federal government, warning that the country’s economic future is being dangerously mortgaged.

In an open letter addressed to Nigerians, the elders said silence in the face of mounting public debt amounted to complicity, stressing that the nation was no longer dealing with routine fiscal decisions but a pattern of borrowing marked by weak accountability and democratic neglect.

It noted that in 2023, the Tinubu administration borrowed N2.17trn for supplemental capital projects, with about 70 per cent of the intended outcomes reportedly achieved.

For 2024, the forum said the federal government borrowed $21.5bn, €2.2bn, and ¥15bn to fund capital projects, yet only about 30 per cent of the capital targets were reportedly met.

The situation, according to the elders, worsened in 2025, when borrowings escalated to include $2.347bn, $347mn, €4bn, N1.15trn and a $500m Sukuk bond.

As of December 11, 2025, the forum claimed that none of the capital projects linked to these loans had been implemented.

“Despite this record, the federal government is now pressing for another N17.89 trillion loan to fund the 2026 budget. This trajectory is neither normal nor sustainable,” the elders warned.

What the CBN is saying

According to the apex bank, “The positive trend in the external position is expected to be sustained in 2026, supported by strong exports, steady remittances inflow, increased oil & gas output, improved domestic refining capacity and rising global demand from key trading partners.

“The current account surplus is expected to rise to US$18.81 billion, while increased portfolio investment inflows and external borrowings are projected to keep the financial account in a net borrowing position of US$10.15 billion.”

The CBN, however, warned that the outlook is subject to risks, including inflationary pressures from excessive fiscal spending, global financial market shocks, geopolitical tensions, and potential disruptions to crude oil production.

It added that it will continue to deploy appropriate policy instruments to maintain price stability, support output growth, attract foreign investment and strengthen financial system stability in 2026.

External reserves to hit $51

billion

Further analysis of the report showed that the country’s external reserves will rise to $51.04 billion in 2026, supported by foreign exchange (FX) reforms.

The CBN also projected the international investment position (IIP) to record a net borrowing position of $69.58 billion in 2026, as attractive yields are anticipated to further boost capital inflows.

The IIP assesses the value and composition of a country’s external financial assets and liabilities. A positive or negative value indicates that a nation is either a creditor or a debtor.

“The IIP is projected to record a net borrowing position of US$69.58 billion in 2026, as attractive yields are anticipated to further boost capital inflows,” the report said.

“Reforms in the foreign exchange market are expected to sustain exchange rate stability, while external reserves are projected to increase to US$51.04 billion.”

GDP projected to rise to 4.49% in 2026

Also in the report, the apex bank noted that the positive outlook builds on gains recorded in 2025, when Nigeria posted a balance of payments surplus of $5.8 billion, supported by a rise in external reserves to an estimated $45.01 billion, from $40.19 billion in 2024.

The report said the relative stability in the FX market was driven by domestic reforms, higher capital inflows, export receipts and expanding local refining capacity.

The CBN projected Nigeria’s economic growth rate to rise to 4.49 percent in 2026, driven by structural reforms, easing monetary policy stance, and increased investment in the oil sector.

Headline inflation is also expected to moderate further to an average of 12.94 per cent, supported by declining food and petrol prices.

On the global front, the CBN said world economic growth moderated slightly to 3.20 percent in 2025, compared with 3.30 per cent in 2024, due to lingering trade tensions and weaker demand in major economies.

“Global inflation moderated to 4.20 per cent, on account of lower energy costs, and the continued normalisation of supply chains,” the regulator added.

“Financial conditions eased in many economies, following moderating inflation, less-restrictive monetary policies, rising investor confidence, and the de-escalation of trade tensions.”

Despite this, the bank said the performance of the Nigerian economy remained strong in 2025, with growth estimated at 3.89 percent, compared with 3.38 percent in 2024.

Headline inflation to moderate at 12.9%

The report further stated that headline inflation is projected to moderate sharply to an estimated average of about 12.94 per cent in 2026, driven by declining food prices and lower premium motor spirit, PMS, costs. The Bank expressed optimism that sustained reforms and improved supply conditions would help anchor inflation expectations.

“Growth in monetary aggregates in 2026 is expected to be influenced largely by exchange rate movements, fiscal operations, election-related spending and continued implementation of prudential measures. Meanwhile, the capital market is projected to remain bullish, supported by the ongoing bank recapitalisation exercise, rising investor confidence and policy measures aimed at fostering growth,” it added.

The Bank also warned that continued geopolitical tensions and a re-escalation of protectionist trade policies could negatively affect Nigeria’s trade balance and exchange rate stability. In the financial sector, a significant rise in non-performing loans could weaken banks’ balance sheets and pose systemic risks, while concentration risks arising from the ongoing recapitalisation exercise could crowd out other issuers and trigger investor fatigue.

Meanwhile, Daily Trust reports that the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has told international investors that Nigeria remains committed to macroeconomic stability, as the country pursues economic reforms amid global financial uncertainty and persistent domestic pressures.

Speaking in Washington, DC, at the US–Nigeria Executive Business Roundtable, where he engaged senior business leaders and institutional investors on Nigeria’s economic outlook, he said, “Nigeria’s reform programme was anchored on rules-based economic management, transparent markets and predictable policy frameworks, which he described as critical to restoring investor confidence.”

CBN’s outlook signals cautious optimism amid lingering risks

— CPPE

The Central Bank of Nigeria’s (CBN) economic outlook for 2026 paints a picture of cautious optimism, projecting stronger growth, moderating inflation and improving external balances, but with clear warnings about fiscal risks, global uncertainties and structural constraints that could derail progress if not carefully managed.

This was the assessment of the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, in a detailed review of the apex bank’s projections, which he described as largely realistic, well-structured and broadly aligned with Nigeria’s current economic fundamentals and policy direction.

According to Yusuf, the outlook reflects growing confidence in Nigeria’s ongoing macroeconomic stabilisation efforts, following a period of volatility triggered by wide-ranging reforms in exchange rate management, fuel pricing and monetary policy. While some of the assumptions appear optimistic, he noted that they remain achievable if supportive policies are sustained and key risks do not materialise. At the centre of the CBN’s outlook is a projected real Gross Domestic Product (GDP) growth rate of 4.49 per cent in 2026. Yusuf said this target appears realistic, given recent improvements in investor sentiment, relative stability in the foreign exchange market and easing cost pressures across parts of the economy.

He explained that growth is expected to be driven by a gradual recovery in industrial and services output, improved access to foreign exchange and moderation in imported inflation. Business confidence has also benefited from clearer policy signals and a more predictable macroeconomic environment.

However, Yusuf cautioned that achieving and sustaining this growth trajectory would require consistency in policy implementation, accelerated infrastructure delivery and stronger coordination between monetary and fiscal authorities. “Without these, the growth momentum could weaken, especially in the face of domestic disruptions or adverse global shocks,” he warned.

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