Abiodun Jimoh
Nigeria’s domestic debt has risen to ₦80.5 trillion as of the fourth quarter of 2025, reflecting growing pressure on public finances as government spending continues to rise faster than earnings.
Fresh data from the Debt Management Office (DMO) shows that the figure represents a 3% increase quarter-on-quarter and a 14% rise year-on-year, driven mainly by continued borrowing to finance budget deficits.
The Federal Government remains the dominant borrower, accounting for about 95% of total domestic debt, while state governments and the Federal Capital Territory (FCT) make up the remaining share. Overall, domestic debt now represents about 54.8% of Nigeria’s total public debt stock, showing a continued reliance on local borrowing to fund government operations.
Officials say the increase is largely tied to efforts to finance the 2026 fiscal deficit, as government expenditure continues to outpace revenue from taxes, oil earnings, and other sources.
So far in 2025, the government has raised about ₦2.6 trillion from the domestic debt market through bond issuances and treasury bills, underscoring its reliance on internal borrowing to bridge funding gaps.
A breakdown of the debt structure shows that FGN bonds remain the largest component, rising to ₦63.6 trillion and accounting for nearly 79% of total domestic debt. Treasury bills also increased to ₦13.9 trillion, reflecting continued short-term borrowing to meet immediate financial obligations.
Although Nigeria’s domestic debt is still considered within sustainable limits—about 19% of GDP for the federal government and nearly 20% when state debts are included—fiscal pressures remain high. The Debt Management Office notes that this is still below the 33% GDP benchmark set as a sustainability threshold.
However, concerns persist over the cost of servicing the debt. Government data indicates that by the first half of 2025, about 84% of federal revenue was used to service debt, with a significant portion going to domestic obligations. This leaves limited fiscal space for infrastructure, education, healthcare, and other critical sectors.
Analysts say the situation highlights a growing fiscal imbalance, where government spending continues to exceed earnings, forcing increased borrowing and raising long-term concerns about debt sustainability.
The Federal Government has expressed hope that ongoing tax reforms will improve revenue generation and reduce reliance on borrowing. However, experts stress that the success of these reforms will depend on effective implementation and stronger fiscal discipline
