Nigeria's Federal Government borrowed N11.9 trillion over the past two years, a figure that would have been significantly higher without the removal of fuel subsidies, the Debt Management Office (DMO) has disclosed. The revelation underscores the country's ongoing fiscal challenges and the impact of recent economic reforms.
Debt Accumulation Details
According to the DMO, the N11.9 trillion borrowing occurred between 2024 and 2025, covering both domestic and external debt obligations. The agency stated that the funds were used to finance budget deficits, infrastructure projects, and debt servicing. The DMO noted that the borrowing was necessary to meet government expenditure commitments amid declining revenues.
A breakdown of the figures shows that domestic debt accounted for the majority of the borrowing, with N8.5 trillion raised through Treasury bills, bonds, and other instruments. External borrowing, including loans from multilateral institutions and bilateral partners, amounted to N3.4 trillion. The DMO emphasized that the government prioritized concessional loans to minimize interest costs.
Subsidy Removal Impact
The DMO attributed the relatively lower debt level to the removal of fuel subsidies in 2023, which saved the government approximately N4 trillion annually. Without this reform, the borrowing would have exceeded N15 trillion, the agency estimated. The subsidy removal was a key policy of President Bola Tinubu's administration, aimed at reducing fiscal pressure and redirecting funds to critical sectors.
“The subsidy removal has been instrumental in preventing a debt spiral,” a DMO official stated. “It has allowed the government to reduce its borrowing needs and allocate resources more efficiently.” The official added that the savings from subsidy removal have been channeled into infrastructure, education, and healthcare, though critics argue that the impact on citizens has been severe due to rising transportation and food costs.
Fiscal Challenges and Reforms
Nigeria's debt-to-GDP ratio stood at 38% as of December 2025, according to the DMO, remaining within the country's self-imposed limit of 40%. However, the debt service-to-revenue ratio exceeded 90%, raising concerns about fiscal sustainability. The government has implemented several reforms, including tax policy changes and the unification of exchange rates, to boost revenue and reduce reliance on borrowing.
The DMO highlighted that the government plans to further reduce borrowing by increasing non-oil revenue through digitalization of tax collection and expanding the tax base. The agency also noted that the government is exploring public-private partnerships to finance infrastructure projects, which could reduce the need for direct borrowing in the future.
Despite these measures, economists warn that the high debt service burden limits the government's ability to invest in social programs. The DMO acknowledged this challenge, stating that debt restructuring and improved revenue generation remain priorities. The agency concluded that the N11.9 trillion borrowing, while significant, reflects a managed approach to fiscal policy amid global economic headwinds.
