Nigeria’s debt servicing burden climbed sharply to about ₦16 trillion in 2025, underscoring rising fiscal pressure as borrowing costs continue to escalate.
Data from the Debt Management Office (DMO) show the figure represents a 22.9 per cent increase from ₦13.02 trillion recorded in 2024, an additional ₦2.98 trillion within a year.
The increase was largely driven by domestic debt obligations, which rose to ₦8.61 trillion in 2025, up from ₦5.87 trillion in the previous year, a jump of 46.6 per cent.
Domestic debt now accounts for 53.8 per cent of total debt servicing, making it the biggest contributor to Nigeria’s rising debt costs.
A closer look reveals that interest payments dominate the burden. Of the ₦8.61 trillion domestic debt service, about ₦8.24 trillion, roughly 95.7 per cent, went into servicing interest, leaving only a small portion for principal repayment.
FGN Bonds accounted for the largest share of these costs at ₦5.35 trillion, followed by treasury bills, which contributed ₦2.55 trillion as the government leaned on short-term borrowing to manage liquidity.
Principal repayments remained minimal at ₦370.93 billion, highlighting the heavy reliance on rolling over debt rather than reducing it.
On the external side, Nigeria spent about $5.15 billion servicing debt in 2025, equivalent to roughly ₦7.39 trillion using the official exchange rate of the Central Bank of Nigeria.
This represents 46.2 per cent of total debt service, slightly lower than domestic obligations but still substantial.
External debt service rose modestly by 10.6 per cent from 2024 levels, indicating slower growth compared to domestic costs.
Commercial debt, largely driven by Eurobonds, accounted for nearly half of external servicing at $2.55 billion. Multilateral loans contributed $1.996 billion, while bilateral obligations stood at $599.95 million.
Unlike domestic debt, external servicing had a more balanced structure, with principal repayments accounting for 59.4 per cent and interest payments 39.5 per cent.
Nigeria’s total public debt also continued to rise, reaching ₦159.28 trillion as of December 31, 2025.
This marks a year-on-year increase of ₦14.61 trillion, reflecting sustained borrowing to finance fiscal deficits.
The data highlight a growing structural challenge: Nigeria is spending more to service debt, largely due to high interest costs on domestic borrowing.
With debt service consuming a significant share of government revenue, the trend raises concerns about fiscal sustainability, crowding out of public spending, and the need for reforms to reduce borrowing costs and improve revenue generation.
