Nigeria’s mounting debt burden again came into focus in the second quarter of 2025 as the Federal Government spent N2.7 trillion on external debt servicing.

This amounted to 45.2 per cent of total revenue generated during the period. According to the Budget Office of the Federation’s Q2 Budget Implementation Report (BIR), the amount exceeded the prorated quarterly estimate of N1.69 trillion by N1.01 trillion, representing a 60.05 per cent overrun.

Total revenue for the quarter stood at N5.97 trillion, meaning nearly half of government earnings were committed to servicing foreign debt obligations alone, raising fresh concerns over debt sustainability and fiscal flexibility.

Nigeria’s external debt stock as at June 2025 stood at N71.85 trillion ($46.98 billion), representing 47.14 per cent of the country’s total public debt.

Overall public debt rose to N152.4 trillion ($99.66 billion) as of June 30, 2025, 2.01 per cent up from N149.39 trillion recorded at the end of March.

The report showed that recurrent debt expenditure in Q2 amounted to N4.44 trillion, exceeding the quarterly projected N3.58 trillion by N862.57 billion or 24.1 per cent.

Domestic debt servicing accounted for N1.71 trillion, marginally below the prorated estimate.
Domestic debt stock rose to N80.55 trillion, accounting for 52.86 per cent of total public debt or a debt-to-GDP ratio of 45.08 per cent as at end-June 2025.

While the ratio is below Nigeria’s self-imposed threshold of 60 per cent and the 56 per cent benchmark for peer economies, international lenders have repeatedly cautioned against Nigeria’s rapid debt accumulation.

Multilateral institutions currently hold 49.4 per cent of Nigeria’s external debt, heightening exposure to global interest-rate shocks. The World Bank and International Monetary Fund (IMF) have both warned that rising debt service costs could crowd out critical social and capital spending.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, cautioned that borrowing must be tied strictly to projects that enhance repayment capacity, warning that excessive reliance on foreign debt exposes the economy to exchange-rate risks.

The BIR report attributed the growth in domestic debt partly to new issuances of Federal Government bonds, with FGN bonds accounting for 79.18 per cent of the domestic debt portfolio, followed by treasury bills, Sukuk, green bonds and promissory notes.