New data from Nigeria's Budget Office reveals a significant portion of the nation's revenue is being consumed by debt repayments. The country's external debt service payments soared in the second quarter of 2025, highlighting ongoing fiscal pressures.
Alarming Debt Service Figures
According to the official Budget Implementation Report for the second quarter of 2025, Nigeria spent a staggering N2.70 trillion on external debt service. This substantial figure represents a sharp increase of N1.01 trillion, or 60.05 per cent, above the prorated quarterly projection of N1.69 trillion.
More critically, this debt service payment consumed a massive 45.2 per cent of the N5.97 trillion in revenue generated by the government during the same period. This ratio underscores the heavy burden debt repayment places on the nation's finances, limiting funds available for critical infrastructure and social services.
Rising Total Debt Stock
The report provides a comprehensive snapshot of Nigeria's overall debt profile as of June 30, 2025. The total public debt stock climbed to N152.40 trillion ($99.66 billion). This marks an increase of N3.01 trillion from the N149.39 trillion recorded at the end of March 2025.
A breakdown shows that external debt stood at N71.85 trillion ($46.98 billion), accounting for 47.14% of the total. Domestic debt made up the remaining 52.86%, at N80.55 trillion ($52.67 billion). The Federal Government's domestic debt alone reached N76.59 trillion by the end of June 2025, rising by N1.7 trillion from the previous quarter.
Composition and Warnings
The structure of the debt reveals key vulnerabilities. On the external front, multilateral lenders hold 49.4 per cent of Nigeria's external debt, amounting to $23.19 billion. Commercial Eurobonds constitute 36.86% ($17.32 billion), with bilateral debts making up 13.21% ($6.20 billion).
Domestically, the debt is primarily composed of FGN Bonds (79.18% or N60.65 trillion) and Nigerian Treasury Bills (16.67% or N12.76 trillion). Other instruments like Sukuk, Promissory Notes, and Green Bonds make up smaller portions.
While the report notes that the net present value of total public debt to the 2024 GDP ratio was 45.08%—below both Nigeria's 60% threshold and an international benchmark of 56%—concerns persist. Institutions like the World Bank and the International Monetary Fund (IMF) have cautioned Nigeria about its accelerating debt accumulation.
Economist Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), echoed these warnings. He stressed that borrowed funds must directly enhance the country's repayment capacity and cautioned against excessive reliance on foreign debt due to the inherent risks of exchange-rate fluctuations.
The data confirms that Nigeria's debt servicing costs are consuming an ever-larger share of national revenue, posing a significant challenge to economic stability and growth. The reliance on external borrowing, particularly from commercial and multilateral sources, leaves the economy exposed to global interest rate shocks, which could further tighten financing conditions.
