Nigeria’s Debt Crisis Deepens Amid N10.85 Trillion Borrowing Spree

Nigeria’s fiscal health has come under intensified scrutiny as new data by the Debt Management Office (DMO) reveals that the Federal Government (FG) borrowed N10.85 trillion domestically in the first four months of 2025, exacerbating concerns over the nation’s unsustainable debt trajectory.

This borrowing increase comes amid a staggering 48.6% year-on-year rise in total public debt, which ballooned to N144.66 trillion in 2024, with the FG accounting for 95% (N137.28 trillion) of this burden. 

The spiraling debt has pushed debt servicing costs to a critical 150% of total government revenue in 2024, up from 65% in 2023, effectively diverting resources from essential public services. Domestic debt servicing rose by 12% to N5.9 trillion, while external obligations climbed 33% to $4.7 billion. Nigeria’s Debt-to-GDP ratio—a key measure of fiscal sustainability—worsened to 52.9% in 2024, signaling heightened vulnerability to economic shocks. 

The FG’s reliance on short-term Treasury Bills (TBs) increased by 8.3% to N8.377 trillion between January and April 2025, peaking at N2.61 trillion in March before plummeting 41% to N1.537 trillion in April. Despite monthly volatility, Savings Bonds also saw a 49.5% spike to N17.29 billion. Analysts attribute this shift to the anticipation of lower interest rates and investor appetite for high-yield, short-dated securities. 

Despite the risks, government securities remain oversubscribed, with N3.33 trillion in investor bids against N1.45 trillion offered in Q1 2025. This demand contrasts sharply with IMF warnings urging countries to curb borrowing amid global debt pressures. The Fund projects Nigeria’s fiscal deficit-to-GDP ratio to worsen to 4.5% in 2025, even as debt-to-GDP ratio marginally dips to 52.5%, partly due to ongoing GDP rebasing efforts. 

Financial analysts remain split on Nigeria’s strategy. While some, like FBNQuest’s Tunde Abidye, cite GDP growth as a mitigating factor, others warn of existential risks. “Debt servicing is swallowing revenue,” stressed David Adonri of Highcap Securities, noting that declining oil prices and unbalanced budgets could trigger “financial embarrassment.” The IMF’s Davide Furceri emphasized urgent revenue reforms and smarter spending to free fiscal space. 

The borrowing spree risks entrapping Nigeria in a debt-distress cycle, where new loans service old debts rather than fund development. With debt costs outpacing revenue, critical sectors like healthcare, education, and infrastructure face underinvestment. Meanwhile, the presidency’s opulent spending, including a presidential jet acquisition, a N21 billion renovation of the Vice Presidential House, luxury vehicles, and yachts amid austerity measures, has drawn sharp criticism. Analysts question the government’s fiscal priorities, arguing that Nigeria cannot afford to sustain borrowing while its leadership wallows in extravagance. 

As the FG leans on short-term instruments to manage costs, the strategy offers temporary relief but defers long-term stability. The IMF’s call for “stronger prioritization” of spending underscores the urgent need for Nigeria to balance growth ambitions with fiscal discipline—a challenge that will define its economic future. For now, the widening chasm between elite luxury and public hardship threatens to erode trust in governance and exacerbate social tensions.