ABUJA — As of March 31, 2025, Nigeria’s public debt has surged to ₦149.39 trillion, marking a significant increase from the ₦121.67 trillion recorded during the same period in 2024. This represents a year-on-year rise of ₦27.72 trillion, or 22.8%, highlighting the nation’s ongoing reliance on borrowing to finance government spending and stabilize its economy.
The data, released by the Debt Management Office (DMO) on Friday, also indicates a quarter-on-quarter increase of ₦4.72 trillion, or 3.3%, compared to ₦144.67 trillion as of December 31, 2024.
According to analysts and economists, this continuous climb in Nigeria’s public debt is driven by two key factors: new borrowings by the Federal Government and the depreciation of the naira, which has significantly inflated the naira-denominated value of external debt.
While the actual increase in dollar terms was relatively moderate — from $42.12 billion in Q1 2024 to $45.98 billion in Q1 2025, a rise of $3.86 billion — the weakening of the naira drastically magnified the local currency value of the debt.
In Q1 2024, the Central Bank of Nigeria (CBN) used an exchange rate of ₦1,330.26 per US dollar to calculate the naira equivalent of external borrowings. Although the DMO did not disclose the exchange rate applied in Q1 2025, the significantly higher naira values imply a further depreciation of the local currency. This currency volatility continues to be a central concern for debt managers and fiscal policymakers.
Nigeria’s Public Debt Rises to ₦149.39 Trillion in Q1 2025 Amid Currency Depreciation and Fiscal Pressures
The DMO report shows that Nigeria’s external debt stood at ₦70.63 trillion by the end of March 2025, up from ₦56.02 trillion in March 2024. This represents a ₦14.61 trillion or 26.1% increase year-on-year. On a quarterly basis, the figure rose modestly by ₦344 billion (0.5%) from ₦70.29 trillion in December 2024.
Nigeria’s external debt includes borrowings from multilateral lenders like the World Bank and the African Development Bank (AfDB), bilateral loans, and commercial debt instruments such as Eurobonds. These borrowings, though necessary for bridging fiscal gaps, carry significant foreign exchange risks.
On the domestic front, Nigeria’s public debt reached ₦78.76 trillion by March 2025, compared to ₦65.65 trillion in March 2024. This reflects a ₦13.11 trillion increase, or 20% year-on-year. Quarter-on-quarter, domestic debt rose from ₦74.38 trillion, a ₦4.38 trillion (5.9%) increase.
The Federal Government accounted for ₦74.89 trillion of the domestic debt, while state governments and the Federal Capital Territory (FCT) held ₦3.87 trillion. Notably, subnational debt declined slightly from ₦3.97 trillion in Q4 2024 and ₦4.07 trillion in Q1 2024, which may suggest reduced borrowing or more effective debt servicing at the state level.
Domestic debt instruments include Federal Government Bonds, Treasury Bills, Sukuk, and Green Bonds, which are commonly used to finance the budget deficit. Although these instruments are immune to exchange rate fluctuations, they carry significant interest obligations and can crowd out private sector lending.
The composition of Nigeria’s public debt has shifted slightly in structure. As of Q1 2025, domestic debt accounted for 52.7% of the total, while external debt represented 47.3%. This compares to a 54% domestic / 46% external split in March 2024.
This shift indicates growing dependence on foreign borrowing — and by extension, increased exposure to exchange rate risk. With the naira continuing to depreciate, the cost of servicing foreign debt is rising, putting additional pressure on already strained government finances.
One of the most pressing consequences of rising debt is the increased cost of servicing it. As the naira weakens and interest rates fluctuate globally, Nigeria’s debt service obligations in both domestic and foreign currencies are becoming more expensive.
This raises concerns about fiscal sustainability, especially as the government continues to face challenges in boosting revenue, diversifying exports, and stabilizing the foreign exchange market. Analysts warn that if not carefully managed, the growing debt burden could undermine economic recovery efforts.
With Nigeria’s public debt nearing ₦150 trillion, the need for structural reforms has never been more urgent. While borrowing remains a necessary tool for development, experts are urging the Federal Government to adopt more sustainable fiscal policies, increase revenue collection, and improve foreign exchange liquidity.
If Nigeria can address the root causes of fiscal imbalance — such as over-reliance on oil, low tax compliance, and currency instability — it may begin to reverse the trend of exponential debt growth and steer the country toward long-term economic resilience.
Source – Punchng
