Analysts raise alarm, say Nigeria’s public debt may hit N160.6trn in 2025

Nigeria’s total public debt could surge to a record N160.6 trillion by December 2025, a development that has sparked renewed concerns among economists and market analysts over the country’s worsening fiscal health.

This stark projection is detailed in the H2 2025 Economic Outlook released by CSL Stockbrokers Limited, a subsidiary of FCMB Group Plc.

According to the report, the Federal Government may need to borrow an additional N9.3 trillion or more in the second half of the year to cover widening fiscal deficits.

This would push the country’s debt-to-GDP ratio to around 50.2% of the pre-rebased GDP, raising fresh questions about the sustainability of Nigeria’s borrowing spree.

“We expect the government to ramp up its borrowing efforts in the second half of the year to bridge the widening fiscal gap,” CSL said. “The total public debt could rise to at least N160.6 trillion by the end of the year.”

Despite the Federal Government’s initial projection of a 3.9% budget deficit relative to GDP in 2025, CSL forecasts a wider gap of 5.8%, citing significant shortfalls in both oil and non-oil revenue.

Oil revenue, which remains the bedrock of Nigeria’s budget, has been under severe pressure. The government’s 2025 oil production target of 2.06 million barrels per day has fallen short, with average production between January and May standing at 1.67 million barrels per day. This underperformance is compounded by lower oil prices, which averaged $70.82 per barrel, below the benchmark price of $75.

“The shortfall in oil revenue is a double-edged sword — production is down, and prices are underperforming. This creates a larger-than-expected revenue gap,” said Dr. Bismarck Rewane, CEO of Financial Derivatives Company. “The pressure on debt will only intensify unless production improves or alternative revenues come through.”

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Efforts to shore up non-oil revenue have also hit roadblocks. A planned increase in the Value Added Tax (VAT) from 7.5% to 10% has stalled in the National Assembly amid opposition from lawmakers concerned about inflation and household hardship. Meanwhile, key tax reforms have been deferred until 2026, further delaying critical revenue improvements.

In a further blow to fiscal consolidation efforts, the Nigerian National Petroleum Company Limited (NNPC) is reportedly remitting only about half of the savings from the removal of fuel subsidies to the Federation Account.

“Revenue leakage from institutions like NNPC adds layers of complication,” noted Kalu Aja, a public finance expert. “When projected inflows don’t materialize, borrowing becomes the default option, which is a dangerous trajectory.”

To plug the fiscal gap, the Federal Government is expected to intensify its presence in both the domestic and international debt markets. CSL noted a recently submitted $25 billion medium-term borrowing plan, which includes foreign-currency-denominated local debt instruments.

There is also growing speculation that Nigeria could return to the Eurobond market later this year to refinance a maturing bond in November, although investor appetite may be cautious given the country’s credit risks.

Despite these efforts, CSL warned that even a potential decline in the debt-to-GDP ratio to 50.7%—expected after the ongoing GDP rebasing—would be largely cosmetic.

READ ALSO: Nigeria’s public debt hits N149.39tn amid FX, external loan surge

“Rebasing GDP may provide temporary relief on paper, but it does not solve the underlying problem of weak revenue generation and poor debt efficiency,” said Ngozi Okonjo-Iweala, former Finance Minister and current Director-General of the WTO, in a recent economic roundtable.

Nigeria’s total public debt stood at N149.39 trillion as of March 31, 2025, according to the Debt Management Office (DMO)—a year-on-year increase of N27.72 trillion, or 22.8%, compared to N121.67 trillion in Q1 2024. On a quarterly basis, the debt stock rose by N4.72 trillion, up 3.3% from N144.67 trillion in December 2024.

A significant part of the increase is attributed to fresh borrowings, as well as the continued depreciation of the naira, which has inflated the local currency value of Nigeria’s external debt.

Analysts warn that unless the government implements meaningful reforms to expand the revenue base and control recurrent spending, Nigeria risks entering a debt trap, where borrowing is used largely to service existing obligations rather than invest in growth.

“The danger is not just the size of the debt but what it is being used for,” said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE). “When debt is used to finance consumption instead of infrastructure or productivity-enhancing projects, the burden becomes unsustainable.”