Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months, Outpaces 2024 Total
Nigeria’s fiscal pressures deepened in 2025 as Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months, exceeding the total amount paid for the entire 2024 financial year, according to fresh data released by the Debt Management Office.
The figures show that between January and September 2025, the Federal Government committed N6.32 trillion to servicing domestic obligations. This surpasses the N5.87 trillion recorded for all of 2024, underscoring the mounting cost of local borrowing amid elevated interest rates and sustained fiscal deficits.
Interest payments dominate spending
A closer look at the breakdown reveals that interest payments accounted for the overwhelming share of the outlay. Of the N6.32 trillion spent, approximately N6.06 trillion went toward interest servicing, while principal repayments made up the balance.
The data indicate that Federal Government of Nigeria (FGN) bonds were the single largest driver of costs. Interest on naira-denominated bonds climbed steadily during the period, reaching a peak of N804.95 billion in September alone.
Cumulatively, interest payments on FGN bonds exceeded N5.35 trillion within nine months — a figure that illustrates the weight of medium- to long-term instruments in the domestic debt portfolio.
As Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months, analysts say the dominance of interest payments signals a structural challenge: a growing share of public revenue is being consumed by financing costs rather than development expenditure.
Treasury bills add to pressure
Short-term borrowing through Nigerian Treasury Bills (NTBs) also contributed significantly to the servicing burden. Interest payments on NTBs surged to N536.05 billion in March after rising to N394.16 billion in February.
Over the nine-month window, total NTB interest payments reached approximately N1.81 trillion. Economists attribute the spike to higher yields in a tight liquidity environment, where aggressive monetary tightening pushed domestic borrowing rates upward.
The trend reinforces concerns that as Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months, the reliance on high-cost short-term instruments may intensify rollover risks and budgetary strain.
Other instruments in the mix
While bonds and treasury bills accounted for the bulk of payments, other debt instruments also added to obligations.
Interest on domestic US dollar bonds was recorded in select months, reflecting foreign currency–linked exposures within the local market. Sukuk instruments saw concentrated payments in April, June and July, while green bonds and FGN savings bonds represented smaller but growing components of the servicing profile.
Principal repayments were largely tied to promissory notes, with notable outlays in February, April and May. However, these repayments were significantly lower than interest costs, further highlighting how coupon payments dominate Nigeria’s domestic debt structure.
March tops monthly outlay
A month-by-month analysis shows that March recorded the highest domestic debt service payment at N1.30 trillion. February followed with N1.03 trillion, while September came in at N998.28 billion.
January posted the lowest figure at N274.74 billion, reflecting comparatively lighter maturities and interest obligations at the start of the year.
The uneven distribution underscores how maturity clustering and coupon schedules influence monthly fiscal pressures. Nonetheless, the headline remains that Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months, setting a pace that could push annual totals to record highs if sustained.
Debt stock continues to rise
Beyond servicing costs, the DMO data show that Nigeria’s domestic debt stock expanded significantly within the same period.
Domestic debt grew by N7.40 trillion between December 2024 and September 30, 2025, increasing from N70.41 trillion to N77.81 trillion — a 10.52 per cent rise in just nine months.
FGN bonds continued to dominate the portfolio, rising from N55.44 trillion (78.73 per cent of total domestic debt) at end-2024 to N61.99 trillion (79.67 per cent) by September 2025. This reflects an additional N6.56 trillion raised through bond issuances.
Within that total, naira-denominated bonds accounted for N60.64 trillion, while domestic US dollar bonds stood at N1.35 trillion.
Treasury bills remained the second-largest component, increasing marginally from N12.35 trillion to N12.68 trillion.
However, their share of total domestic debt declined from 17.54 per cent to 16.30 per cent, indicating relatively faster growth in bond issuances.
Other instruments also recorded expansion:
FGN Sukuk increased from N992.56 billion to N1.29 trillion.
FGN Savings Bonds rose from N72.87 billion to N97.46 billion.
Green Bonds climbed from N15 billion to N62.36 billion.
Promissory Notes edged up from N1.54 trillion to N1.69 trillion.
The scale at which Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months has reignited debate over fiscal sustainability and revenue adequacy.
Public finance experts warn that when interest payments consume a large proportion of federally retained revenue, the government’s capacity to fund capital projects, social programmes and infrastructure development becomes constrained.
In recent years, debt service-to-revenue ratios have drawn scrutiny, particularly during periods when revenue growth lags behind rising borrowing costs.
Higher domestic yields, driven partly by monetary tightening and inflation management policies, have elevated the cost of new issuances, compounding the servicing burden.
Looking ahead, analysts say the trajectory of domestic debt servicing will depend on three primary factors:
Interest rate movements and monetary policy direction.
Government borrowing strategy and deficit financing needs.
Revenue mobilisation performance, particularly from non-oil sources.
If borrowing continues at the current pace and yields remain elevated, annual domestic debt service payments could significantly exceed prior records.
For policymakers, the challenge lies in balancing fiscal stimulus, infrastructure financing and macroeconomic stability without further escalating servicing costs.
As Federal Govt Spends N6.32trn On Domestic Debt Servicing In 9 Months, the data present both a warning signal and a call for strategic recalibration of Nigeria’s debt management framework.
The coming quarters will reveal whether revenue reforms and borrowing adjustments can slow the acceleration of interest obligations — or whether debt servicing will continue to absorb an expanding share of public resources.
About The Author
