Nigeria’s total public debt stock breached the N152-trillion mark for the first time, reaching N152.39 trillion at the end of June 2025, the National Bureau of Statistics (NBS) disclosed on Monday. The fresh N3.01-trillion increase in just three months highlights the accelerating pace of government borrowing to plug widening fiscal gaps.
For the first time since the post-COVID surge, domestic debt has overtaken external debt in naira terms. Local creditors now hold N80.55 trillion (52.86% of the total), while foreign lenders account for N71.84 trillion (47.14%), equivalent to $46.98 billion at the prevailing official exchange rate.
The shift reflects the federal government’s deliberate pivot toward naira-denominated instruments to reduce currency risk, even as it comes at the cost of higher interest burdens in an era of 27% benchmark rates.
Federal Government taps local market for N6.17 trillion in first half of 2025
The Debt Management Office (DMO) revealed that between January and June, the Federal Government raised N6.17 trillion almost exclusively from domestic investors through FGN bonds, Treasury bills, and promissory notes. The heavy reliance on local savings has crowded out credit to the private sector and kept borrowing costs elevated.
Lagos dwarfs other states in indebtedness
Lagos State retained its long-standing position as Nigeria’s most indebted sub-national entity, owing N1.04 trillion in domestic obligations and an additional $1.04 billion externally. Rivers State followed at a distant second with N364.39 billion in local debt, while Kaduna carried the heaviest external state debt at $658.7 million.
At the opposite end, Jigawa State reported the lowest domestic debt at just N852.49 million, underlining the stark regional disparities in fiscal pressure.
Rising cost of servicing foreign loans
External debt service payments jumped to $932.1 million in Q2 alone, with multilateral institutions—led by the World Bank and African Development Bank—claiming the lion’s share of $629 million. Commercial creditors, including Eurobond holders, received $261 million, while bilateral lenders such as China and France took home a comparatively modest $41 million.
Experts sound alarm on sustainability
Despite repeated assurances from the DMO that Nigeria’s debt-to-GDP ratio remains “moderate” at around 42%, a growing chorus of economists warns that the more relevant metric—revenue-to-debt-service ratio—has deteriorated sharply. With debt service now consuming over 90% of federally collected revenue in some months, fiscal space for critical infrastructure and social spending continues to shrink.
Speaking at last month’s Capital Market Academics of Nigeria symposium, analysts described the current trajectory as “a slow-motion crisis,” cautioning that without a significant rebound in oil production, non-oil exports, and tax collection efficiency, Nigeria risks sliding into a classic middle-income debt trap.
As the 2026 budget cycle begins, policymakers face the twin challenge of financing ambitious capital projects while preventing the public debt stock from spiralling further toward the N200-trillion psychological threshold before the end of the decade.
