Abuja, Nigeria — Nigeria’s total public debt stock hit N152.40 trillion by 30 June 2025, rising from N149.39 trillion just three months earlier, according to the Debt Management Office (DMO).
That N3.01 trillion increase — about 2.01% — highlights the government’s increasing dependence on borrowing to plug budget shortfalls and fund ongoing projects.
Converted to dollars, the debt climbed from $97.24 billion to $99.66 billion, marking a 2.49% uptick over the quarter.
External vs Domestic Debt: The Breakdown
The DMO report shows both external and domestic debt pushed the total upward.
- External debt reached $46.98 billion (about N71.85 trillion), up from $45.98 billion (≈ N70.63 trillion) at the end of March.
- Domestic debt rose to N80.55 trillion from N78.76 trillion — a quarterly increase of N1.79 trillion (2.27%).
On the domestic front, Federal Government bonds dominate, totaling N60.65 trillion — roughly 79.2% of domestic debt.
Other instruments include Treasury bills, Ways and Means advances, Sukuk, savings bonds, green bonds, and promissory notes.
As for debt ownership, the Federal Government shoulders N141.08 trillion (92.6%) of the total. The remaining N11.32 trillion (7.4%) belongs to Nigeria’s 36 states and the FCT (Federal Capital Territory).
Of that subnational debt, $4.81 billion (≈ N7.36 trillion) is external, and N3.96 trillion is domestic.
What’s Driving the Rising Debt?
Several forces converge to push Nigeria’s debt higher:
- Persistent fiscal deficits: The government often spends more than it collects. High recurrent costs — salaries, debt servicing, subsidies — force it to borrow heavily.
- Exchange rate effects: Much of Nigeria’s external debt is in foreign currency. When the naira weakens, the domestic value of external obligations jumps.
- Infrastructure borrowing: To build roads, power plants, railways and more, Nigeria relies on external and domestic debt to supplement internal resources.
- Short-term borrowing: Use of short-dated instruments (Treasury bills, advances) helps fill immediate cash gaps but increases rollover risk.
- Global headwinds: Rising global interest rates, inflation, and volatility make borrowing costlier, especially on the external side.
Risks & Red Flags
Although the DMO argues the debt remains manageable, analysts flag multiple concerns:
- Debt service burden & crowding out
More debt means more interest payments. That squeezes funds available for health, education, and infrastructure. - Exchange rate risk
A sudden naira devaluation could sharply raise Nigeria’s external debt burden in naira terms. - Exposure to global markets
Heavy reliance on Eurobonds and commercial loans ties Nigeria’s fortunes to global investor sentiment. - State debt fragility
The 36 states and FCT carry rising debt too. Their weaker revenue bases make servicing more precarious. - Debt-to-GDP trajectory
Nigeria’s debt-to-GDP ratio is not yet alarming, but if the borrowing pace continues, it could cross uncomfortable thresholds. - Policy credibility & market confidence
Investors watch debt trends closely. Ongoing growth in debt may erode confidence, push yields higher, and increase risk premiums.
What the Government Proposes
To manage debt, officials and economists are advocating these strategies:
- Boost revenues: Expand the tax base, plug revenue leakages, and grow non-oil income.
- Cut wasteful spending: Reassess subsidies, prioritize high-impact projects, and streamline government costs.
- Restructure or refinance debt: Seek longer maturities or lower-cost instruments (for example, concessional loans, sukuk, green bonds).
- Coordinate fiscal and monetary policy: Stabilize inflation and the exchange rate to ease debt servicing pressure.
- Strengthen oversight: Improve transparency at the DMO, ensure states borrow responsibly, and make new borrowing accountable.
Voices from Analysts & Stakeholders
Economists warn that, unless Nigeria slows borrowing and accelerates growth, it risks entering a debt trap — borrowing more just to service existing debt.
Others argue borrowing itself isn’t harmful if it funds infrastructure or productive investment. The key lies in efficiency and return on investment.
States face pressure to curb their own borrowing and shore up internal revenue systems.
International lenders and goodwill partners are watching too: they want to see if Nigeria truly undertakes reforms or becomes weighed down by unsustainable debt.
What to Watch in 2026 and Beyond
- Quarterly debt growth: Does Nigeria keep adding ~N3 trillion every three months, or does it slow?
- Debt service ratio: How much of government revenue goes into servicing debt?
- Debt composition: Will the balance shift toward concessional and long-term debt?
- State-level borrowing: Will states remain cautious or overextend?
- Reform effectiveness: Will revenue enhancements, spending rationalisation, and borrowing discipline yield results?
- Market signals: Bond yields, credit ratings, and foreign investor appetite will reflect confidence or alarm.
Conclusion
Nigeria reaching a public debt level of N152.40 trillion as of June 2025 signifies more than a fiscal benchmark. It signals the weight of competing priorities — development, social services, infrastructure — under constrained revenue and rising costs.
The scale and rapid growth of debt demand serious structural reforms. For debt to remain sustainable, Nigeria must not just borrow less, but borrow smarter—ensuring every naira spent yields returns.
Whether Nigeria’s debt becomes a manageable tool for growth or a burden that undermines future capacity depends on political will, fiscal discipline, and external confidence.
