Nigeria's total public debt rose to N159.35 trillion as of March 31, 2026, according to the Debt Management Office (DMO). This represents an increase of N8.04 trillion from the N151.31 trillion recorded at the end of December 2025, despite the naira appreciating against the US dollar during the period.
Breakdown of the Debt Stock
The debt stock comprises the external and domestic debts of the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT). The DMO's data shows that domestic debt stood at N97.15 trillion, while external debt was N62.20 trillion.
The increase in the naira value of the debt occurred even as the naira strengthened, which would normally reduce the naira equivalent of dollar-denominated external debt. This suggests that new borrowings, particularly in the domestic market, outpaced the valuation gains from currency appreciation.
Domestic Debt Drives the Rise
The domestic debt component rose significantly, driven by government borrowing from the domestic market to finance budget deficits. The Federal Government's domestic debt accounted for the bulk, with state governments and the FCT also contributing.
According to the DMO, the domestic debt includes treasury bills, savings bonds, and other instruments. The increase in domestic borrowing reflects the government's strategy to rely more on internal sources to fund infrastructure and other projects, given the volatility in the international capital markets.
External Debt and Currency Effects
External debt, which is denominated in foreign currencies, was valued at N62.20 trillion. In dollar terms, the external debt may have decreased due to the naira's appreciation, but the naira value still rose in some categories because of new disbursements.
The DMO noted that the naira appreciated from about N1,550 per dollar in December 2025 to around N1,400 per dollar by March 2026, which would have reduced the naira value of external debt. However, new external borrowings and revaluations of other components offset these gains.
Implications for the Economy
The rising public debt raises concerns about debt sustainability, especially as debt service costs consume a significant portion of government revenue. Analysts have called for increased revenue generation and prudent borrowing to ensure the debt remains sustainable.
According to economic experts, the government must focus on improving non-oil revenue and expanding the tax base to reduce reliance on borrowing. The DMO has also emphasized the need for concessional loans to ease the debt burden.
The increase in public debt comes amid efforts by the government to boost economic growth and reduce poverty. However, the high debt service payments may limit fiscal space for social spending and infrastructure development.
State Governments' Debt
The state governments and the FCT accounted for a significant portion of the total debt, with their combined debt stock rising to about N20 trillion. Many states have been borrowing heavily to fund infrastructure projects and meet recurrent expenditures.
The DMO has urged states to improve their internally generated revenue (IGR) and adopt prudent financial management to avoid a debt crisis. Some states have already shown improvement in IGR, but others remain heavily dependent on federal allocations.
Future Outlook
Looking ahead, the government plans to reduce borrowing by increasing revenue and privatizing some state-owned enterprises. The 2026 budget has set a deficit of N13.8 trillion, which will be financed through a mix of domestic and external borrowing.
The DMO expects that the full-year debt figures for 2026 will be released later in the year, providing a clearer picture of the debt trajectory. In the meantime, the government is exploring public-private partnerships to finance infrastructure without adding to the debt stock.
In conclusion, while the stronger naira provided some relief, the overall public debt continues to rise, underscoring the need for sustained fiscal reforms and revenue mobilization.
