Nigeria’s Federal Government, under President Bola Tinubu, is on track to spend more than N91 trillion on debt servicing between 2023 and 2028, underscoring the growing fiscal strain posed by public borrowing amid persistently weak revenue performance.
The projection is derived from an analysis of debt service provisions in the 2023 and 2024 federal budgets, the 2025 Appropriation Act, and forward estimates contained in the Medium-Term Expenditure Framework (MTEF) for 2026–2028.
Analysts say the figures reflect a troubling mix of widening fiscal deficits, a rapidly expanding debt stock and elevated interest rates, pressures that have intensified since 2023.
Federal Government debt service obligations have climbed sharply in both budgeted and actual terms. In 2023, the government initially earmarked N6.56 trillion for debt service but ended the year having spent N8.56 trillion, overshooting the target by about N2 trillion.
The situation deteriorated further in 2024. Although N8.27 trillion was budgeted for debt service, actual expenditure surged to N12.63 trillion, reflecting higher-than-expected borrowing costs and additional debt accumulation.
For 2025, the government has budgeted N14.32 trillion for debt service. However, by the end of the first seven months of the year, actual debt service payments had already reached N9.8 trillion, exceeding the pro-rated target of N8.35 trillion.
If the current trend persists, analysts warn that full-year debt service could once again overshoot the budgeted figure.
Looking ahead, the MTEF projects debt service costs of N15.9 trillion in 2026, rising sharply to N19.8 trillion in both 2027 and 2028. While the cumulative budgeted debt service for the six-year period stands at about N84.6 trillion, historical patterns of overspending suggest that the final outturn could exceed N91 trillion.
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Capital Spending Squeezed
Over the same period, the Federal Government plans to spend N114.8 trillion on capital expenditure. However, actual releases for capital projects have consistently lagged behind debt service payments, raising concerns about the sustainability of public investment.
In 2023, capital spending amounted to N6.3 trillion, far below the N8.56 trillion spent on debt service. The gap widened in 2024, when debt service exceeded capital expenditure by about N11.5 trillion.
The trend has continued in 2025. Pro-rated capital expenditure for the first seven months stands at just N3.59 trillion, compared with a pro-rated budget expectation of N13.6 trillion. This indicates that capital projects—often seen as critical to growth, job creation and infrastructure development—are again bearing the brunt of fiscal pressure as debt obligations take priority.
Revenue Weakness at the Core
Economists say Nigeria’s rising debt service burden is fundamentally linked to weak and volatile government revenues. Although actual revenue in 2023 slightly exceeded the budget at N12.48 trillion, the improvement proved short-lived.
In 2024, actual revenue fell to N20.98 trillion, undershooting the budget by nearly N5 trillion and forcing the government to borrow more to close the gap.
Early indicators for 2025 are equally concerning, with pro-rated aggregate revenue for the first seven months estimated at N13.6 trillion, far below the pro-rated budget expectation of N23.8 trillion.
“If this pattern continues, Nigeria could end 2025 with a significantly higher debt service-to-revenue ratio, which is one of the clearest indicators of fiscal stress,” said Dr Muda Yusuf, a development economist and former Director-General of the Lagos Chamber of Commerce and Industry.
Debt Stock and Interest Rates Add Pressure
Beyond revenue shortfalls, Nigeria’s debt service costs are being amplified by the rapid expansion of the debt stock and high borrowing costs.
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Domestic debt has risen from N54.3 trillion in 2022 to about N80.5 trillion, reflecting increased reliance on local borrowing. External debt has also climbed from $41.6 billion to $46.9 billion, adding foreign exchange risk to servicing obligations.
At the same time, the Central Bank of Nigeria’s tight monetary policy stance has pushed government borrowing rates above 20 per cent in recent years, significantly increasing interest costs on new and refinanced debt.
According to financial analyst and economist Bismarck Rewane, “Nigeria is increasingly trapped in a cycle where it borrows at very high interest rates to cover revenue gaps, and that borrowing then feeds into even higher debt service costs. This crowds out spending on growth-enhancing sectors.”
Calls for Urgent Reforms
Experts warn that Nigeria is drifting into a fiscal structure where debt service grows faster than revenue, limiting the government’s capacity to invest in infrastructure, healthcare, education and other productivity-enhancing sectors.
“Unless revenue reforms deliver sustained and structural gains, or borrowing costs fall meaningfully, debt service will remain the single largest claim on public finances throughout this administration,” said economist and public finance analyst Dr Ayo Teriba.