Nigeria's escalating public debt has triggered fresh alarm after official data revealed the government spent nearly half of its earnings in a single quarter just to service foreign loans.
Q2 2025: A Heavy Debt Servicing Burden
According to the Budget Office of the Federation's Second Quarter Budget Implementation Report (BIR), the Federal Government dedicated a staggering N2.7 trillion to external debt servicing between April and June 2025. This colossal sum consumed 45.2 per cent of the total N5.97 trillion revenue generated by the government in that period.
The expenditure far exceeded its target. The amount spent was N1.01 trillion higher than the prorated quarterly estimate of N1.69 trillion, representing a massive budget overrun of 60.05 per cent. This means that for every N100 the government earned, about N45 was immediately allocated to paying interest and principal on debts owed to foreign creditors.
The Growing Mountain of Total Public Debt
The report provided a snapshot of Nigeria's total debt profile as of June 30, 2025. The nation's overall public debt climbed to N152.4 trillion ($99.66 billion), a 2.01 per cent increase from the N149.39 trillion recorded at the end of March.
Breaking this down, the external debt stock stood at N71.85 trillion ($46.98 billion), constituting 47.14 per cent of the total debt. On the other hand, domestic debt, which is money borrowed within Nigeria, rose to N80.55 trillion, accounting for the remaining 52.86 per cent.
While Nigeria's debt-to-GDP ratio was reported at 45.08 per cent—below the country's self-set 60 per cent limit—the speed of accumulation remains a major concern. International financial institutions have consistently warned about the risks of Nigeria's rapid debt build-up.
Experts Warn of Fiscal and Economic Risks
The situation has drawn serious warnings from economists and multilateral lenders. The World Bank and the International Monetary Fund (IMF) have cautioned that soaring debt service costs threaten to crowd out essential spending on social services, infrastructure, and capital projects vital for economic growth.
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), highlighted specific vulnerabilities. He advised that government borrowing must be strictly linked to projects that generate returns and enhance repayment capacity. "Excessive reliance on foreign debt exposes the economy to exchange-rate risks," Yusuf cautioned, noting that currency fluctuations can dramatically increase the local currency cost of repaying dollar-denominated loans.
The BIR report noted that the growth in domestic debt was partly driven by new issuances of Federal Government bonds. FGN bonds dominate the domestic portfolio, making up 79.18 per cent, followed by treasury bills, Sukuk, green bonds, and promissory notes.
A particularly worrying detail is the composition of the external debt. Multilateral institutions like the World Bank and IMF hold 49.4 per cent of Nigeria's external debt, making the country highly susceptible to global interest-rate shocks, which can increase servicing costs overnight.
The data underscores a persistent fiscal challenge: a significant portion of Nigeria's earnings is now pre-committed to debt obligations, severely limiting the government's flexibility to respond to economic shocks and fund national development priorities.
