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The United Nations Conference on Trade and Development (UNCTAD) has indicated that many countries, particularly those in development, are struggling under the weight of significant debt.
In 2023, the external debt of developing nations reached an unprecedented $11.4 trillion, accounting for 99 percent of their export revenues.
Furthermore, projections suggest that Nigeria's total debt may exceed N155 trillion by 2025, as the government plans to borrow an additional N13 trillion to cover the deficit in the 2025 budget.
As of September 30, 2024, Nigeria's debt stands at N142.3 trillion, according to the Debt Management Office (DMO), coupled with a revenue-to-debt servicing ratio of 65 percent.
The UN organization pointed out that rather than investing in critical infrastructure, education, and healthcare, mounting debt pressures are pushing governments into hard choices.
It noted that approximately 3.3 billion individuals reside in nations where debt servicing costs surpass investments in health or education.
During the 14th International Debt Management Conference held in Geneva, Switzerland, from March 17 to 19, 2025, UNCTAD's Secretary-General, Rebeca Grynspan, urged for reforms to avert the current debt crisis from hindering progress.
She stated, “We have inherited a system that requires reform; in front of us is the opportunity to create one that benefits people and fosters stability, long-term development, and prevents recurring defaults.
Interest payments surpass climate investments in nearly all developing countries, constraining their capacity to tackle global challenges. This forces nations to prioritize defaults on their development over their debt obligations. No more debt defaults, but a commitment to development.”
Grynspan emphasized that as the world approaches the 4th International Conference on Financing for Development later this year, this biennial debt conference aims to outline concrete solutions to alleviate debt distress while safeguarding sustainable development.
The takeaway from the 14th International Debt Management Conference was unmistakable: urgent reforms are essential to ensure that debt functions as a means for progress instead of an impediment. Through global collaboration and innovative strategies, nations can escape the cycle of unsustainable debt and invest in a more resilient and inclusive future.
Nigeria is actively pursuing measures to improve its debt circumstances. Historically, the country allocated a substantial portion of its annual income, up to 97 percent, towards debt servicing, which has resulted in economic stagnation and hindered development. However, under the current government, there has been a reduction in Nigeria’s revenue-to-debt service ratio from 97 percent to 65 percent.
Recent data from the Central Bank of Nigeria (CBN) shows a noticeable decrease in Nigeria’s total debt service payments, from $540 million in January 2025 to $276 million in February 2025. This decline is occurring alongside the federal government’s ongoing initiatives to restructure its debt portfolio, enhance dollar liquidity, and alleviate pressure on the foreign exchange market.
