Nigeria’s debt burden has continued to climb, with the latest report from the Debt Management Office (DMO) revealing that Nigeria’s public debt stock reached a record N152.4 trillion as of June 30, 2025.
The new figure highlights the Federal Government’s growing dependence on borrowing to sustain public spending amid sluggish revenue growth and economic headwinds.
According to the DMO’s quarterly update released on Saturday, the nation’s total debt increased by N3.01 trillion from N149.39 trillion in March, marking a 2.01 per cent rise in just three months.
In dollar terms, Nigeria’s debt stock jumped from $97.24 billion to $99.66 billion, representing a 2.49 per cent increase over the period.
The DMO attributed the rise to the government’s continued recourse to both domestic and external borrowing to finance budgetary shortfalls and critical infrastructure projects.
Analysts, however, warn that the pace of accumulation could weigh heavily on fiscal sustainability, especially as debt servicing consumes an increasing share of national revenue.
The DMO’s data shows that the World Bank remains Nigeria’s biggest external lender, with a total of $18.04 billion in outstanding loans.
Most of these credits were obtained through the International Development Association (IDA), the World Bank’s concessional arm for low-income countries.
The institution’s loans now account for about 38 per cent of Nigeria’s total external debt, underscoring the country’s reliance on multilateral assistance.
Overall, multilateral agencies—including the African Development Bank (AfDB), the International Monetary Fund (IMF), and the Islamic Development Bank (IsDB)—collectively hold $23.19 billion, representing 49.4 per cent of Nigeria’s external loan portfolio.
Bilateral creditors, on the other hand, contributed $6.20 billion, with China’s Export-Import Bank leading at $4.91 billion, followed by France, Japan, India, and Germany.
Commercial borrowings, primarily in the form of Eurobonds, stood at $17.32 billion, accounting for 36.9 per cent of external debt. Another $268.9 million was owed under syndicated facilities and commercial bank loans.
The DMO cautioned that the country’s exposure to international capital markets, through Eurobonds, leaves it vulnerable to global financial volatility and exchange rate shocks.
On the domestic front, Nigeria’s debt stock climbed from N78.76 trillion in March to N80.55 trillion in June, an increase of N1.79 trillion or 2.27 per cent.
The Federal Government’s bonds dominate the local debt market, amounting to N60.65 trillion, which accounts for 79.2 per cent of the total domestic debt profile.
This figure includes N36.52 trillion in traditional naira bonds, N22.72 trillion in securitised Ways and Means advances from the Central Bank of Nigeria (CBN), and N1.40 trillion in dollar-denominated bonds.
The securitisation of the CBN’s overdrafts, initially meant for short-term budget support, effectively transformed temporary borrowings into long-term public liabilities—a move economists say highlights fiscal stress within the government’s finances.
Other components of domestic debt include N12.76 trillion in Treasury Bills, N1.29 trillion in Sukuk bonds, N91.53 billion in savings bonds, N62.36 billion in green bonds, and N1.73 trillion in promissory notes.
Together, these instruments make up the complex structure of Nigeria’s debt stock, which continues to expand despite ongoing fiscal reforms.
According to the DMO, the Federal Government is responsible for N141.08 trillion, or 92.6 per cent, of Nigeria’s total public debt.
This includes N64.49 trillion in external liabilities and N76.59 trillion in domestic obligations.
The 36 state governments and the Federal Capital Territory (FCT) collectively owe N11.32 trillion, equivalent to 7.4 per cent of the national total.
Of the subnational debt, $4.81 billion (N7.36 trillion) represents external obligations, while N3.96 trillion is domestic.
Experts note that while states are less indebted in comparison to the Federal Government, their debt-servicing capabilities remain weak due to limited internally generated revenue and dependency on federal allocations.
Despite the DMO’s assurance that Nigeria’s debt stock remains within sustainable limits relative to GDP, concerns persist over the high cost of debt servicing and its impact on public spending.
The country’s debt service-to-revenue ratio has remained above 70 per cent, meaning that more than two-thirds of government revenue is spent on paying interest and principal.
The Federal Government has defended its borrowing, arguing that loans are essential to finance infrastructure projects and economic diversification initiatives.
However, with oil revenues underperforming and non-oil taxes still below target, Nigeria faces growing pressure to manage its debt prudently.
Economists have urged the Tinubu administration to expand the tax base, reduce fiscal leakages, and improve the efficiency of public spending to reduce borrowing needs.
The ongoing fiscal and monetary reforms, including the unification of exchange rates and removal of fuel subsidies, are expected to attract investment and strengthen external reserves—but the benefits may take time to materialize.
Financial experts have also called on the government to ensure greater transparency in the management of Nigeria’s debt stock, particularly the utilisation of proceeds from Eurobonds and multilateral loans.
They argue that while concessional financing offers low interest rates, the lack of accountability in project execution often undermines long-term benefits.
Furthermore, as the global financial environment tightens and the naira continues to depreciate, debt servicing costs are projected to rise.
This could worsen fiscal pressures and constrain the government’s capacity to fund social programmes and infrastructure.
As Nigeria edges toward another budget cycle, policymakers face the daunting task of balancing debt sustainability with economic growth objectives.
The DMO has maintained that ongoing debt restructuring and fiscal reforms will stabilise the country’s financial outlook, but analysts insist that borrowing must be matched with productivity and revenue expansion.
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