The Federal Government has unveiled a new strategy it hopes would help it better manage its debt.The new strategy, the Medium-Term Debt Management Strategy (MTDS) 2024-2027, succeeds the elapsed MTDS 2020-2023.

MTDS is a public debt management (PDM) tool that links borrowing with the macroeconomic framework of a country to ensure that the costs and risks of the debt portfolio are within sustainable levels.

As at the end of the first quarter of 2025, Nigeria’s total public debt was N149.39 trillion, made up of N78.76 trillion domestic debt and N70.63 trillion external debt.

Experts have raised concerns that the country’s debt could become unsustainable given the rate at which it is rising, even though the government has argued that the debts are still within acceptable limits.

Every four years, the Debt Management Office (DMO), in conjunction with relevant ministries, departments and agencies (MDAs) of the Federal Government, formulates the MTDS to guide its PDM decisions and operations with technical support from the World Bank and the International Monetary Fund.

The DMO, which announced the unveiling in a statement posted on its official website at the weekend, said the formulation and implementation of an MTDS is widely recognised as an international best practice in PDM.

It said the process leading to the formulation of MTDS 2024 – 2027 involved the consideration of various strategies aimed at determining the best strategy that meets the financing needs of the government, while meeting its cost and risk objectives.

It said the MTDS 2024 – 2027 covers the FGN debts as well as the external debt of sub-nationals but excluding the domestic debt of the sub-nationals. The MTDS is designed to guide the central government’s borrowing and debt management strategy. DMO added that it also includes explicit contingent liabilities of the FGN.

According to the DMO, MTDS 2024 – 2027 was initially completed using the macroeconomic projections in the medium-term expenditure framework (MTEF) 2024 – 2026 with 2023 as the base year.

The DMO said a review of the performance of the MTDS 2020-2023 in terms of the cost and risk indicators of the FGN debt portfolio as at December 31, 2023, compared with the set targets, reveals that the total public debt-to-output ratio was 40.57 per cent as at December 31, 2023 and 52.25 per cent as of December 31, 2024, which exceeded the country-specific target of 40 per cent.

But it is below the 70 per cent threshold contained in the Market-Access Country-Debt Sustainability Framework (MAC-DSF) developed by the IMF for market access countries like Nigeria, which is the same as the ECOWAS convergence threshold of 70 per cent.

It said the increase in debt-to-gross domestic product (GDP) from 19 per cent in 2019 to 40.57 per cent in 2023 and 52.25 per cent in 2024 was due to higher levels of new borrowings, issuance of promissory notes as well as the inclusion of N30 trillion ways and means advances (WMAs) of the Central Bank of Nigeria (CBN).

It also noted that the average time to maturity (ATM) was 12.77 years and 11.05 years in 2023 and 2024 respectively as against a minimum target of 10 years, while debt maturing in one year as a percentage of total debt was 10.44 per cent and 13.91 per cent during the review periods, as against a maximum target of 20 per cent.

Long-term to short-term domestic debt was 88:12 and 82:18 in 2023 and 2024, respectively, as against the target of a minimum of 75.

“These show that the targets in the MTDS 2020 – 2023 were mostly outperformed. As stated above, the exchange rate of USD1/N800 in the 2024 Appropriation Act initially used to prepare the MTDS was jettisoned because the official exchange rate was actually higher than this; indeed, the end-period exchange rate as of December 31, 2024, was USD1/N1,535.32. Other macro and debt data for 2024 were updated, while macro projections in the MTEF/FSP 2025-2027 and the 2025 Appropriation Act were used for the projections,” DMO said.