Nigeria’s debt crisis deepens as FG borrows N10.85trn in four months

• Published On: 12 May 2025 at 19:16

Nigeria's debt situation is increasing, with the Federal Government borrowing a whopping N10.85 trillion from domestic sources between January and April 2025, according to new figures from the Debt Management Office.

The borrowing surge coincides with a 48.6% year-on-year increase in total public debt, which is expected to reach N144.66 trillion by 2024. The FG accounts for 95%, or N137.28 trillion.

Debt servicing currently absorbs 150% of government revenue, up significantly from 65% in 2023. In 2024, Nigeria spent N5.9 trillion on domestic debt service (a 12% rise), while overseas debt payments increased by 33% to almost $4.7 billion. The country's debt-to-GDP ratio has also risen to 52.9%, indicating increased fiscal hardship.

Short-term Treasury Bills accounted for a major percentage of borrowing, rising 8.3% to N8.38 trillion in early 2025, peaking in March and dropping in April. Savings Bonds increased by 49.5% to N17.29 billion, with analysts blaming investor desire for high-yielding assets despite forecasts of reduced interest rates.

Despite the hazards, investor appetite remains high. In Q1 2025, bids for government securities totalled N3.33 trillion, more than double the N1.45 trillion offered. This comes as the IMF cautions Nigeria and other developing economies to curtail borrowing, citing a widening fiscal deficit of 4.5% GDP in 2025.

Experts are split. While some argue that GDP growth provides breathing room, others worry that debt servicing is consuming revenue. "We are on the brink of financial embarrassment," warned David Adonri of Highcap Securities.

In the midst of this, public uproar has erupted over government expenditure on luxury items such as a new presidential jet and a N21 billion restoration of the vice president's mansion. Critics claim that Nigeria cannot afford luxurious leadership while the people face the brunt of austerity.

To avoid a debt spiral, the IMF recommends immediate income reforms and more prudent governmental spending. For the time being, the widening disparity between elite extravagance and public poverty puts national patience to the test.

Tagged: debt.