Nigeria’s total debt stock is projected to surge to N187.79 trillion in 2025, driven by aggressive borrowing, naira depreciation, and escalating borrowing costs, according to a report by investment and research firm Cardinalstone.
The report reveals that the country’s debt had already reached N153.04 trillion by the end of 2024, largely due to the issuance of a dollar-denominated domestic bond worth $900 billion, routine borrowings through Treasury Bills (NTBs) and bonds, and a return to the Eurobond market, where Nigeria raised $2.20 billion.
“We estimate government debt to reach N187.79 trillion in 2025. The sharp rise in government debt has heightened concerns about its sustainability,” analysts stated in the report titled Pressure to Plateau.
Escalating Debt and Economic Implications
Nigeria’s debt stock has risen significantly in recent years, jumping from N49.85 trillion before the 2023 general elections to N134.30 trillion by mid-2024. This sharp growth reflects policy-driven naira depreciation, reliance on domestic borrowings, and higher borrowing costs.
As of the second quarter of 2024, the country’s foreign debt stood at N63 trillion ($43 billion), representing 47% of the total debt profile. Of this, the Federal Government accounted for N56 trillion, while the 36 states and the Federal Capital Territory (FCT) collectively borrowed N7 trillion externally.
On the domestic front, borrowings constituted 53% of Nigeria’s total debt, with the Federal Government owing N66 trillion and the states carrying N4 trillion.
The country’s public debt-to-GDP ratio climbed to 58% in Q2 2024, surpassing the Debt Management Office’s (DMO) self-imposed ceiling of 40%. While still below the International Monetary Fund’s (IMF) benchmark of 60% for emerging economies, weak revenue generation and foreign exchange volatility may worsen the debt burden.
Rising Debt Servicing Costs
Nigeria’s debt service costs have soared, placing a significant strain on government finances. In the first half of 2024 alone, debt servicing surged by 69% year-on-year to N6.0 trillion, consuming 50% of the Federal Government’s total expenditure.
This resulted in a debt service-to-revenue ratio of 162%, up from 128% in 2023, meaning the government is spending more than its generated revenue on servicing debts.
Analysts warned that the growing debt obligations, coupled with the nation’s worst cost-of-living crisis in decades, could escalate into a full-blown debt crisis.
Debt Obligations and Outlook
The report highlighted Nigeria’s significant debt obligations, including Eurobond maturities averaging $1.33 billion annually over the next decade. When combined with coupon payments, annual debt servicing costs could average $2.24 billion.
“These maturities suggest that debt repayment and servicing costs are likely to remain high in the near to medium term,” the report noted.
Despite these challenges, the analysts believe Nigeria’s external debt-linked ratios—such as external debt service as a percentage of exports—still fall within the IMF’s prescribed thresholds.
Public Concerns
The rising debt profile has sparked concerns among Nigerians, who have called on the government to implement measures to reduce borrowing and ease the burden of debt servicing. Many have also urged policymakers to focus on improving revenue generation and curbing corruption to mitigate the economic strain.
With Nigeria’s debt set to approach N187.79 trillion in 2025, policymakers face the urgent task of balancing borrowing needs with fiscal sustainability. Analysts warn that without significant reforms, the growing debt burden could hinder the country’s economic growth and development.
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