Nigeria’s total public debt has ballooned to N149.39 trillion as of March 31, 2025, marking a year-on-year increase of N27.72 trillion or 22.8% from N121.67 trillion recorded in the same period of 2024.
This is according to the latest data released by the Debt Management Office (DMO), which underscores growing concerns over the country’s debt sustainability and rising exposure to foreign currency obligations.
On a quarter-on-quarter basis, public debt rose by N4.72 trillion or 3.3% from N144.67 trillion in December 2024, continuing a steady upward trajectory in Nigeria’s borrowing pattern.
Nigeria’s external debt component surged to N70.63 trillion ($45.98 billion) in Q1 2025, up from N56.02 trillion ($42.12 billion) in Q1 2024—representing a 26.1% increase in naira terms and a $3.86 billion rise in actual dollar value.
The quarter-on-quarter increase was more modest, rising by N344 billion or 0.5% from N70.29 trillion in December 2024.
Analysts attribute much of the naira-based spike in external debt to currency depreciation, as the Central Bank of Nigeria (CBN) had used an exchange rate of N1,330.26/$ in Q1 2024 for debt conversion.
While the Q1 2025 rate was not disclosed, the sharper rise in naira valuation of debt suggests a further weakening of the local currency.
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“Even if dollar borrowings rise moderately, the impact on debt servicing in naira terms becomes exponential when the currency depreciates,” said Dr. Obinna Nkemdirim, a fiscal policy expert. “This creates a vicious cycle of mounting debt service costs with limited fiscal headroom.”
Domestic Debt Also On the Rise
Domestic debt also posted significant growth, reaching N78.76 trillion ($51.26 billion) by March 2025—a year-on-year increase of N13.11 trillion or 20%, and a quarter-on-quarter rise of N4.38 trillion or 5.9% from N74.38 trillion in December 2024.
Out of this amount, the Federal Government is responsible for N74.89 trillion, while the 36 states and the Federal Capital Territory (FCT) hold a combined N3.87 trillion.
Notably, subnational debt declined from N4.07 trillion in Q1 2024 and N3.97 trillion in Q4 2024—an improvement linked to better debt management practices and increased allocations from the Federation Account Allocation Committee (FAAC).
Domestic borrowings are typically raised through Treasury Bills, FGN Bonds, Sukuk, and Green Bonds. Though these instruments are shielded from foreign exchange volatility, they come with high interest obligations that strain public finances.
Debt Composition and Economic Risk
The latest figures show that domestic debt now accounts for 52.7% of Nigeria’s total public debt, while external debt makes up 47.3%, reflecting a growing tilt toward foreign borrowing amid revenue constraints and a widening fiscal deficit.
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Financial analyst Amina Ojeifo highlighted the structural risk of external debt dominance. “When your revenues are mostly in naira but your repayment obligations are in dollars, you’re extremely vulnerable to exchange rate shocks,” she explained. “The more the naira weakens, the costlier it becomes to service foreign loans.”
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Public finance consultant Dr. Zubairu Bello echoed similar concerns, stating that the rising external debt share could crowd out development spending. “As repayment costs escalate due to naira depreciation, Nigeria faces a shrinking fiscal space for critical infrastructure and social investments,” he warned.
The Bigger Picture
While borrowing remains a common tool for development financing, Nigeria’s debt trajectory has raised alarms among economists and multilateral institutions.
The growing debt burden—fueled by exchange rate volatility, high domestic interest rates, and weak revenue performance—may undermine efforts to achieve fiscal consolidation.
Experts continue to call for stronger debt management strategies, economic diversification, and structural reforms aimed at boosting revenue generation and reducing reliance on costly borrowing.