Nigeria’s total public debt ballooned to N149.39 trillion as of March 31, 2025, according to data from the Debt Management Office (DMO), indicating a year-on-year increase of N27.72 trillion compared to N121.67 trillion recorded in the corresponding period of 2024.

The increase was largely due to naira depreciation, as it continues to affect the value of the external debt.

On a quarterly basis, the country’s debt surged by N4.72 trillion, or 3.3 per cent, from N144.67 trillion as of December 31, 2024.

This was on account of fresh borrowings and the effect of naira depreciation on foreign debt obligations.

According to the DMO data, Nigeria’s external debt as of March 31, 2025, stood at N70.63 trillion ($45.98 billion), an increase from N56.02 trillion ($42.12 billion) in the same period in 2024.

This represents a year-on-year increase of N14.61 trillion, or 26.1%. In quarter-on-quarter terms, external debt rose modestly from N70.29 trillion in December 2024 — a marginal increase of N344 billion or 0.5%.

The Central Bank of Nigeria (CBN)’s official exchange rate used for converting debt in Q1 2024 was N1,330.26 per US dollar, while 1,536.315 was applied as of 31st March, 2025.

This, according to analysts, reflects the growing concerns about the impact of naira depreciation on debt obligations.

Nigeria has several external debt obligations ranging from multilateral institutions, including the World Bank and the African Development Bank Group; bilateral loans such as China Exim Bank, and Japan International Cooperation Agency, among others, as well as commercial loans such as Eurobonds.

There was also a major increase in the domestic component of Nigeria’s debt, hitting N78.76 trillion ($51.26 billion) at the end of March 2025.

This reflects a year-on-year increase of N13.11 trillion or 20% from N65.65 trillion ($49.35 billion) in March 2024. On a quarterly basis, domestic debt rose by N4.38 trillion or 5.9%, up from N74.38 trillion in December 2024.

According to the data, dated June 27, 2025, and accessed on the website of the DMO, of the total public debt, N74.89 trillion belonged to the Federal Government while the 36 states and the Federal Capital Territory (FCT) jointly accounted for N3.87 trillion.

Also, the data indicated that domestic debt by states declined slightly from N3.97 trillion in Q4 2024 and from N4.07 trillion in Q1 2024.

Domestic debt instruments consist of government securities such as Treasury Bills, FGN Bonds, Sukuk, and Green Bonds.

There are also promissory notes, both local and foreign currency denominated P-notes.

According to DMO, the figure excludes FGN Bonds in the sum of N680.42bn issued to restructure States’ Commercial Debt but includes FGN Bonds of N22.719 trillion issued to restructure Ways and Means Advances of the CBN.

It added that the “FGN US Dollar Bond of USD917,405,000 issued in September 6, 2024, was converted to Naira using the CBN Official Exchange Rate of 1USD to N1,536.315 as at 31st March, 2025.

“The Foreign Currency Denominated P-Notes Outstanding amount of USD670,212,085 as at March, 2025, were converted to Naira using CBN Official exchange rate of 1USD to N1,536.315 as at 31st March, 2025.”

As of the first quarter of 2025, the composition of the total public debt indicated an almost equal split as domestic debt accounted for 52.7% while external debt accounted for 47.3%.

But the share of external debt, analysts say, poses a risk to the stability of the financial system amidst the volatility in the foreign exchange market.

Economic analyst and Senior Analyst at SBM Professionals, Paul Alaje, had earlier in January predicted that the debt profile might hit N150 trillion by the end of the first quarter of 2025.

“One of our 7 macroeconomic indicators and other parameters projected for the year 2025 is that Nigeria’s debt profile will cross N150 trillion. Today, we expected this in Q2, but the report shows that this may happen at the end of Q1,” he said.

Debt servicing gulps N2.6 trillion

In the period under review, the DMO also disclosed that debt servicing totaled N2,609,864,731,634.08 comprising N274,738,667,543.78; N1,030,767,830,907.80 and N1,304,358,233,182.50 in January, February and March respectively.

It explained that the FGN US Dollar Bond Interest amount of $44,971,957.60416666 due March 6, 2025, was converted to naira using the CBN Official Exchange Rate of N 1,511.8022 as at March 6, 2025.

Also, the Foreign Denominated Promissory Notes of $57,024,884.00 in respect of FX Note for Judgement Creditor/Sovereign Debt, due to be redeemed February 15, 2025, was redeemed in March 28, 2025 using the CBN Externalization Exchange Rate of 1USD to N1,537.6163.

Naira appreciates on US Dollar turnover in FX Market

Meanwhile, the exchange rate appreciated at the official FX window following the US dollar turnover in the currency market.

The local currency stayed on the uptrend while the external reserves dropped down to $37.3 billion, according to data from the Central Bank of Nigeria (CBN).

The local currency sustained its modest appreciation in the week, supported by foreign portfolio investor (FPI) and exporter inflows.

Early last week, rates hovered around $/N1500–1558 range and a fixing of N1549.57, according to AIICO Capital Limited in a note.

Activity picked up sharply toward the end of the week, as a surge in turnover, reportedly $324 million, boosted liquidity and drove spot rates as low as $/N1510–1520.

The fixing dropped to N1549, reflecting stronger supply. By Friday, the naira closed at $/N1539.2359, appreciating by 52.5 basis points week on week, while external reserves fell by $293.87 million to $37.369 billion.

Nigeria in dilemma over rising debt – Economist

An economist, Prof. Garba Sheka, said the country faces a dilemma of how to meet its financial obligations. According to him, government is finding it difficult to meet its financial obligations and taking loans becomes the last resort.

He said, “I think we are in a dilemma because there is nothing government can do. If there is anything they can do it is to strengthen the naira value and that is not possible without adequate dollars and having adequate dollars depends on how the economy is performing, how we are able to keep our foreign reserve.

“Theoretically, it is not good to be collecting debts and so on but practically, in reality, a democratic government cannot wait for the little revenue to pay salaries, and then spend four years and go away. It is not possible.

“There was a time we challenged a former Senate president, ‘why is it that anytime they are seeking approval to take out a loan, it doesn’t take time?’ He said, what do you want us to do? We are not working with theory here, we are working with reality.

“This is a democratic government that wants to be remembered as Zik, Sardauna or Awolowo; they want to be remembered as a government that constructed one road or the other, they want to be in history and they came and met the office empty. The only option is to go and take a loan so that they can also make their impact.”

‘Impact of subsidy removal not being felt’

The economist noted that despite the removal of subsidy from premium motor spirit (PMS), also known as petroleum, in 2023 and the increased revenue to all tiers of government, the impact is still not being felt.

“This subsidy removal, we have said and I am sure after some time people will start regretting. Despite how corrupt people thought Abacha (former Military President late General Sani Abacha), after the military government increased pump prices, they were able to make an impact through the Petroleum Trust Fund,” he added.

He stated that more money had been given to state governors without much impact.

According to him, the money saved from fuel subsidy removal should have been channeled through a body made of men and women of integrity to manage the utilization of the funds to benefit the people.

Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf in a chat with Daily Trust said the federal government now needs to slow down with accumulating more debt to reduce the debt service obligations.

“The only thing I will expect from the government is that they should slow down so that the debt service obligations do not choke us,” he said.