Nigeria’s debt service burden remained elevated in 2025, with new data showing that the Federal Government spent a significant portion of its earnings on servicing debt obligations during the first nine months of the year.
According to the 2025 Third Quarter Budget Implementation Report, total debt service payments stood at N12.52 trillion between January and September 2025, accounting for more than 67% of total government revenue over the period.
The figures imply that for every N100 earned by the Federal Government, more than N67 was used to service existing debt obligations, underscoring mounting fiscal pressure on public finances.
What the data is saying
The report highlights the growing strain debt servicing is placing on Nigeria’s fiscal position amid rising borrowing costs and expanding public debt obligations.
Key highlights include:
- Total debt service reached N12.52 trillion between January and September 2025
- Debt servicing consumed over 67% of total government revenue
- More than two-thirds of earnings were used to meet debt obligations
- The development reflects persistent pressure on fiscal sustainability
The elevated debt service-to-revenue ratio continues to limit fiscal space available for capital projects, infrastructure development, and social spending.
More insights
Nigeria’s rising debt service burden has been driven by several factors, including:
- Higher domestic borrowing costs due to elevated interest rates
- Increased issuance of Treasury Bills and FGN bonds
- Growing external debt obligations
- Exchange rate pressures affecting foreign debt repayments
- Wider fiscal deficits requiring continued borrowing
Analysts note that while Nigeria’s debt-to-GDP ratio remains moderate relative to some peer economies, the more critical concern is the government’s weak revenue base.
The report reinforces concerns that:
- Revenue growth has not kept pace with debt accumulation
- A large portion of government earnings is tied up in recurrent obligations
- Fiscal flexibility remains constrained despite economic reforms
What you should know
Nigeria has continued to rely on both domestic and external borrowing to finance:
- Budget deficits
- Infrastructure projects
- Subsidy-related obligations
- Economic reform programmes
- Foreign exchange stabilisation efforts
Recent reforms by the Federal Government and the Central Bank of Nigeria have focused on improving fiscal sustainability through:
- Fuel subsidy removal
- Foreign exchange market reforms
- Revenue mobilisation initiatives
- Tax reform proposals
However, elevated interest rates and macroeconomic pressures have continued to increase debt servicing costs across both domestic and external obligations.
Economists have repeatedly stressed the importance of boosting non-oil revenue generation, improving tax efficiency, and accelerating economic growth to reduce pressure on public finances over the medium term.
