An analysis of federal budget documents reveals that debt servicing costs under President Bola Tinubu’s administration are projected to surpass N91 trillion between 2023 and 2028. This mounting obligation highlights the growing fiscal pressure from public borrowing amid persistent weaknesses in government revenue.
The estimate, derived from the 2023 and 2024 budgets, the 2025 Appropriation Act, and the Medium-Term Expenditure Framework for 2026–2028, underscores a trend of escalating costs driven by expanding fiscal deficits, a rising debt stock, and elevated interest rates.
Escalating Costs Outpace Budgets
Actual debt service payments have consistently exceeded budgeted amounts. In 2023, the government spent N8.56 trillion against a budget of N6.56 trillion. The gap widened in 2024, with actual payments of N12.63 trillion far outstripping the N8.27 trillion initially allocated.
For 2025, the budget sets aside N14.32 trillion for debt service. However, spending in the first seven months alone reached N9.8 trillion, already exceeding the pro-rated target and signaling another year of overrun.
Forward projections indicate continued growth, with debt service costs estimated at N15.9 trillion in 2026 and N19.8 trillion in both 2027 and 2028. The cumulative budgeted total for the six-year period stands at N84.6 trillion, but based on recent trends, analysts warn the final figure could easily cross the N91 trillion mark.
Capital Expenditure Suffers
The surge in debt servicing is directly squeezing funding for critical development projects. While N114.8 trillion is budgeted for capital expenditure from 2023 to 2028, actual releases consistently lag.
In 2023 and 2024, debt service spending significantly exceeded capital expenditure. The trend has intensified in 2025, with pro-rated capital spending at just N3.59 trillion for the first seven months, compared to a pro-rated expectation of N13.6 trillion, indicating that debt obligations are taking clear priority over public investment.
Rooted in Revenue Weakness
The ballooning debt burden is fundamentally linked to volatile and underperforming government revenues. While 2023 revenues slightly exceeded budget, 2024 revenues fell nearly N5 trillion short of target. Preliminary data for 2025 shows revenues for the first seven months at N13.6 trillion, far below the pro-rated expectation of N23.8 trillion, threatening a severe increase in the debt service-to-revenue ratio.
Compounding Factors: More Debt, Higher Rates
The cost of servicing debt is being amplified by two factors: a growing debt stock and high interest rates. Domestic debt has risen from N54.3 trillion in 2022 to N80.5 trillion, while external debt has increased from $41.6 billion to $46.9 billion. Simultaneously, the Central Bank’s high-interest-rate policy has pushed government borrowing costs above 20%, significantly increasing interest expenses on new and refinanced debt.
A Constrained Fiscal Future
Analysts note that Nigeria is increasingly locked into a fiscal structure where debt service grows faster than revenue. This dynamic crowds out essential capital spending in infrastructure, healthcare, and education, limiting the government’s capacity to invest in productivity and long-term economic growth.
The trajectory suggests that without sustained gains from revenue reforms or a meaningful reduction in borrowing costs, debt service will remain the largest claim on public finances for the foreseeable future, challenging the administration’s broader economic agenda.
